Correlation Between The Arbitrage and The Arbitrage

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

By analyzing existing cross correlation between The Arbitrage Credit and The Arbitrage Fund, you can compare the effects of market volatilities on The Arbitrage and The Arbitrage 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 The Arbitrage with a short position of The Arbitrage. Check out your portfolio center. Please also check ongoing floating volatility patterns of The Arbitrage and The Arbitrage.

Diversification Opportunities for The Arbitrage and The Arbitrage

0.5

Correlation Coefficient

The Arbitrage  The Arbitrage

Very weak diversification

The 3 months correlation between The and The is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding The Arbitrage Credit and The Arbitrage Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Arbitrage and The Arbitrage 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 The Arbitrage Credit are associated (or correlated) with The Arbitrage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Arbitrage has no effect on the direction of The Arbitrage i.e., The Arbitrage and The Arbitrage go up and down completely randomly.

Pair Corralation between The Arbitrage and The Arbitrage

Assuming the 90 days horizon The Arbitrage Credit is not expected to generate positive returns. However, The Arbitrage Credit is 4.98 times less risky than The Arbitrage. It waists most of its returns potential to compensate for thr risk taken. The Arbitrage is generating about 0.02 per unit of risk. If you would invest  1,191  in The Arbitrage Fund on September 2, 2024 and sell it today you would earn a total of  1.00  from holding The Arbitrage Fund or generate 0.08% return on investment over 90 days.

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

The Arbitrage Credit  vs.  The Arbitrage Fund

Arbitrage Credit

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Arbitrage Credit are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, The Arbitrage is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

The Arbitrage

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in The Arbitrage Fund are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, The Arbitrage is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with The Arbitrage and The Arbitrage

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

The idea behind The Arbitrage Credit and The Arbitrage 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.

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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.