Correlation Between Arrow Managed and Schwab Us

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

Diversification Opportunities for Arrow Managed and Schwab Us

0.0

Correlation Coefficient

Arrow Managed  Schwab Us

Pay attention - limited upside

The 3 months correlation between Arrow and Schwab is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Managed Futures and Schwab Treasury Money in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schwab Treasury Money 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 Schwab Us. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schwab Treasury Money has no effect on the direction of Arrow Managed i.e., Arrow Managed and Schwab Us go up and down completely randomly.

Pair Corralation between Arrow Managed and Schwab Us

Assuming the 90 days horizon Arrow Managed Futures is expected to under-perform the Schwab Us. In addition to that, Arrow Managed is 5.76 times more volatile than Schwab Treasury Money. It trades about -0.02 of its total potential returns per unit of risk. Schwab Treasury Money is currently generating about 0.08 per unit of volatility. If you would invest  96.00  in Schwab Treasury Money on October 2, 2024 and sell it today you would earn a total of  4.00  from holding Schwab Treasury Money or generate 4.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.7%
Values	Daily Returns

Arrow Managed Futures  vs.  Schwab Treasury Money

Arrow Managed Futures

Risk-Adjusted Performance

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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.

Schwab Treasury Money

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Schwab Treasury Money has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Schwab Us 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 Schwab Us

The main advantage of trading using opposite Arrow Managed and Schwab Us positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arrow Managed position performs unexpectedly, Schwab Us 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 Schwab Us will offset losses from the drop in Schwab Us' long position.

The idea behind Arrow Managed Futures and Schwab Treasury Money 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 Transaction History module to view history of all your transactions and understand their impact on performance.