Correlation Between Arrow Managed and Df Dent

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Can any of the company-specific risk be diversified away by investing in both Arrow Managed and Df Dent 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 Df Dent 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 Df Dent Small, you can compare the effects of market volatilities on Arrow Managed and Df Dent 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 Df Dent. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arrow Managed and Df Dent.

Diversification Opportunities for Arrow Managed and Df Dent

ArrowDFDSXDiversified AwayArrowDFDSXDiversified Away100%
0.05
  Correlation Coefficient

Significant diversification

The 3 months correlation between Arrow and DFDSX is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Managed Futures and Df Dent Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Df Dent Small 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 Df Dent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Df Dent Small has no effect on the direction of Arrow Managed i.e., Arrow Managed and Df Dent go up and down completely randomly.

Pair Corralation between Arrow Managed and Df Dent

Assuming the 90 days horizon Arrow Managed Futures is expected to generate 1.11 times more return on investment than Df Dent. However, Arrow Managed is 1.11 times more volatile than Df Dent Small. It trades about 0.09 of its potential returns per unit of risk. Df Dent Small is currently generating about 0.06 per unit of risk. If you would invest  544.00  in Arrow Managed Futures on October 25, 2024 and sell it today you would earn a total of  36.00  from holding Arrow Managed Futures or generate 6.62% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Arrow Managed Futures  vs.  Df Dent Small

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 -6-4-202468
JavaScript chart by amCharts 3.21.15MFTFX DFDSX
       Timeline  
Arrow Managed Futures 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Arrow Managed Futures are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Arrow Managed may actually be approaching a critical reversion point that can send shares even higher in February 2025.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan5.35.45.55.65.75.85.9
Df Dent Small 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Df Dent Small are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Df Dent is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan24.52525.52626.527

Arrow Managed and Df Dent Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.93-2.94-1.96-0.970.011.02.013.034.04 0.050.100.150.200.250.30
JavaScript chart by amCharts 3.21.15MFTFX DFDSX
       Returns  

Pair Trading with Arrow Managed and Df Dent

The main advantage of trading using opposite Arrow Managed and Df Dent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arrow Managed position performs unexpectedly, Df Dent 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 Df Dent will offset losses from the drop in Df Dent's long position.
The idea behind Arrow Managed Futures and Df Dent Small 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.
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.

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