Correlation Between WBI BullBear and Arrow DWA

Can any of the company-specific risk be diversified away by investing in both WBI BullBear and Arrow DWA 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 WBI BullBear and Arrow DWA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between WBI BullBear Value and Arrow DWA Tactical, you can compare the effects of market volatilities on WBI BullBear and Arrow DWA 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 WBI BullBear with a short position of Arrow DWA. Check out your portfolio center. Please also check ongoing floating volatility patterns of WBI BullBear and Arrow DWA.

Diversification Opportunities for WBI BullBear and Arrow DWA

-0.17

Correlation Coefficient

WBI BullBear  Arrow DWA

Good diversification

The 3 months correlation between WBI and Arrow is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding WBI BullBear Value and Arrow DWA Tactical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow DWA Tactical and WBI BullBear 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 WBI BullBear Value are associated (or correlated) with Arrow DWA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrow DWA Tactical has no effect on the direction of WBI BullBear i.e., WBI BullBear and Arrow DWA go up and down completely randomly.

Pair Corralation between WBI BullBear and Arrow DWA

Given the investment horizon of 90 days WBI BullBear Value is expected to under-perform the Arrow DWA. But the etf apears to be less risky and, when comparing its historical volatility, WBI BullBear Value is 1.05 times less risky than Arrow DWA. The etf trades about -0.43 of its potential returns per unit of risk. The Arrow DWA Tactical is currently generating about -0.17 of returns per unit of risk over similar time horizon. If you would invest  2,887  in Arrow DWA Tactical on October 1, 2024 and sell it today you would lose (80.00) from holding Arrow DWA Tactical or give up 2.77% of portfolio value over 90 days.

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

WBI BullBear Value  vs.  Arrow DWA Tactical

WBI BullBear Value

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WBI BullBear Value has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, WBI BullBear is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Arrow DWA Tactical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arrow DWA Tactical has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest uncertain performance, the Etf's fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the ETF retail investors.

Pair Trading with WBI BullBear and Arrow DWA

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

The idea behind WBI BullBear Value and Arrow DWA Tactical 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.