Correlation Between Arrow Financial and Juniata Valley

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

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

Diversification Opportunities for Arrow Financial and Juniata Valley

0.78

Correlation Coefficient

Arrow Financial  Juniata Valley

Poor diversification

The 3 months correlation between Arrow and Juniata is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Financial and Juniata Valley Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Juniata Valley Financial and Arrow Financial 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 Financial are associated (or correlated) with Juniata Valley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Juniata Valley Financial has no effect on the direction of Arrow Financial i.e., Arrow Financial and Juniata Valley go up and down completely randomly.

Pair Corralation between Arrow Financial and Juniata Valley

Given the investment horizon of 90 days Arrow Financial is expected to generate 0.78 times more return on investment than Juniata Valley. However, Arrow Financial is 1.28 times less risky than Juniata Valley. It trades about 0.02 of its potential returns per unit of risk. Juniata Valley Financial is currently generating about 0.01 per unit of risk. If you would invest  2,778  in Arrow Financial on September 20, 2024 and sell it today you would earn a total of  127.00  from holding Arrow Financial or generate 4.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	90.32%
Values	Daily Returns

Arrow Financial  vs.  Juniata Valley Financial

Arrow Financial

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Arrow Financial are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Arrow Financial is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Juniata Valley Financial

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Juniata Valley Financial are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Juniata Valley reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Arrow Financial and Juniata Valley

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

The idea behind Arrow Financial and Juniata Valley Financial 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.