Correlation Between Arrow Financial and Papaya Growth

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

By analyzing existing cross correlation between Arrow Financial and Papaya Growth Opportunity, you can compare the effects of market volatilities on Arrow Financial and Papaya Growth 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 Papaya Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arrow Financial and Papaya Growth.

Diversification Opportunities for Arrow Financial and Papaya Growth

0.15

Correlation Coefficient

Arrow Financial  Papaya Growth

Average diversification

The 3 months correlation between Arrow and Papaya is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Financial and Papaya Growth Opportunity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Papaya Growth Opportunity 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 Papaya Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Papaya Growth Opportunity has no effect on the direction of Arrow Financial i.e., Arrow Financial and Papaya Growth go up and down completely randomly.

Pair Corralation between Arrow Financial and Papaya Growth

Given the investment horizon of 90 days Arrow Financial is expected to generate 1.37 times less return on investment than Papaya Growth. In addition to that, Arrow Financial is 1.85 times more volatile than Papaya Growth Opportunity. It trades about 0.01 of its total potential returns per unit of risk. Papaya Growth Opportunity is currently generating about 0.02 per unit of volatility. If you would invest  1,021  in Papaya Growth Opportunity on September 28, 2024 and sell it today you would earn a total of  98.00  from holding Papaya Growth Opportunity or generate 9.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Arrow Financial  vs.  Papaya Growth Opportunity

Arrow Financial

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Arrow Financial are ranked lower than 2 (%) 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.

Papaya Growth Opportunity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Papaya Growth Opportunity has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Papaya Growth is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Arrow Financial and Papaya Growth

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

The idea behind Arrow Financial and Papaya Growth Opportunity 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.