Correlation Between Arrow Managed and Global Fixed
Can any of the company-specific risk be diversified away by investing in both Arrow Managed and Global Fixed 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 Global Fixed 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 Global Fixed Income, you can compare the effects of market volatilities on Arrow Managed and Global Fixed 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 Global Fixed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arrow Managed and Global Fixed.
Diversification Opportunities for Arrow Managed and Global Fixed
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Arrow and Global is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Managed Futures and Global Fixed Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Fixed 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 Global Fixed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Fixed Income has no effect on the direction of Arrow Managed i.e., Arrow Managed and Global Fixed go up and down completely randomly.
Pair Corralation between Arrow Managed and Global Fixed
Assuming the 90 days horizon Arrow Managed Futures is expected to generate 7.38 times more return on investment than Global Fixed. However, Arrow Managed is 7.38 times more volatile than Global Fixed Income. It trades about 0.07 of its potential returns per unit of risk. Global Fixed Income is currently generating about 0.12 per unit of risk. If you would invest 544.00 in Arrow Managed Futures on October 24, 2024 and sell it today you would earn a total of 27.00 from holding Arrow Managed Futures or generate 4.96% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Arrow Managed Futures vs. Global Fixed Income
Performance |
Timeline |
Arrow Managed Futures |
Global Fixed Income |
Arrow Managed and Global Fixed Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Arrow Managed and Global Fixed
The main advantage of trading using opposite Arrow Managed and Global Fixed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arrow Managed position performs unexpectedly, Global Fixed 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 Global Fixed will offset losses from the drop in Global Fixed's long position.Arrow Managed vs. Leader Short Term Bond | Arrow Managed vs. Nuveen Strategic Municipal | Arrow Managed vs. Ambrus Core Bond | Arrow Managed vs. Artisan High Income |
Global Fixed vs. Lord Abbett Small | Global Fixed vs. Great West Loomis Sayles | Global Fixed vs. Small Cap Growth Profund | Global Fixed vs. Fidelity Small Cap |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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