Correlation Between Arrow Managed and Baron Fifth

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

Diversification Opportunities for Arrow Managed and Baron Fifth

0.48

Correlation Coefficient

Arrow Managed  Baron Fifth

Very weak diversification

The 3 months correlation between Arrow and Baron is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Managed Futures and Baron Fifth Avenue in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Fifth Avenue 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 Baron Fifth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Fifth Avenue has no effect on the direction of Arrow Managed i.e., Arrow Managed and Baron Fifth go up and down completely randomly.

Pair Corralation between Arrow Managed and Baron Fifth

Assuming the 90 days horizon Arrow Managed is expected to generate 13.89 times less return on investment than Baron Fifth. In addition to that, Arrow Managed is 1.01 times more volatile than Baron Fifth Avenue. It trades about 0.01 of its total potential returns per unit of risk. Baron Fifth Avenue is currently generating about 0.11 per unit of volatility. If you would invest  2,754  in Baron Fifth Avenue on September 29, 2024 and sell it today you would earn a total of  3,313  from holding Baron Fifth Avenue or generate 120.3% return on investment over 90 days.

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

Arrow Managed Futures  vs.  Baron Fifth Avenue

Arrow Managed Futures

Risk-Adjusted Performance

0 of 100

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.

Baron Fifth Avenue

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Baron Fifth Avenue are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Baron Fifth showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Arrow Managed and Baron Fifth

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

The idea behind Arrow Managed Futures and Baron Fifth Avenue 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.