Correlation Between Arrow Managed and Archer Income

Can any of the company-specific risk be diversified away by investing in both Arrow Managed and Archer Income at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Arrow Managed and Archer Income into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Arrow Managed Futures and Archer Income Fund, you can compare the effects of market volatilities on Arrow Managed and Archer Income and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Arrow Managed with a short position of Archer Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arrow Managed and Archer Income.

Diversification Opportunities for Arrow Managed and Archer Income

-0.38

Correlation Coefficient

Arrow Managed  Archer Income

Very good diversification

The 3 months correlation between Arrow and Archer is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Managed Futures and Archer Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Archer Income and Arrow Managed is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Arrow Managed Futures are associated (or correlated) with Archer Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Archer Income has no effect on the direction of Arrow Managed i.e., Arrow Managed and Archer Income go up and down completely randomly.

Pair Corralation between Arrow Managed and Archer Income

Assuming the 90 days horizon Arrow Managed Futures is expected to under-perform the Archer Income. In addition to that, Arrow Managed is 13.45 times more volatile than Archer Income Fund. It trades about -0.02 of its total potential returns per unit of risk. Archer Income Fund is currently generating about 0.17 per unit of volatility. If you would invest  1,790  in Archer Income Fund on December 20, 2024 and sell it today you would earn a total of  22.00  from holding Archer Income Fund or generate 1.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Arrow Managed Futures  vs.  Archer Income Fund

Arrow Managed Futures

Risk-Adjusted Performance

Very Weak

Over the last 90 days Arrow Managed Futures has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Arrow Managed is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Archer Income

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Archer Income Fund are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Archer Income is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Arrow Managed and Archer Income

The main advantage of trading using opposite Arrow Managed and Archer Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arrow Managed position performs unexpectedly, Archer Income can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Archer Income will offset losses from the drop in Archer Income's long position.

The idea behind Arrow Managed Futures and Archer Income Fund pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Technical Analysis module to check basic technical indicators and analysis based on most latest market data.