Correlation Between Arrow Managed and Short-term Fund

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

Diversification Opportunities for Arrow Managed and Short-term Fund

-0.65
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Arrow and Short-term is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Managed Futures and Short Term Fund Administrative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Short Term Fund 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 Short-term Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Short Term Fund has no effect on the direction of Arrow Managed i.e., Arrow Managed and Short-term Fund go up and down completely randomly.

Pair Corralation between Arrow Managed and Short-term Fund

Assuming the 90 days horizon Arrow Managed Futures is expected to generate 13.85 times more return on investment than Short-term Fund. However, Arrow Managed is 13.85 times more volatile than Short Term Fund Administrative. It trades about 0.03 of its potential returns per unit of risk. Short Term Fund Administrative is currently generating about 0.22 per unit of risk. If you would invest  560.00  in Arrow Managed Futures on September 5, 2024 and sell it today you would earn a total of  10.00  from holding Arrow Managed Futures or generate 1.79% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Arrow Managed Futures  vs.  Short Term Fund Administrative

 Performance 
       Timeline  
Arrow Managed Futures 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Arrow Managed Futures are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. 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.
Short Term Fund 

Risk-Adjusted Performance

17 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Short Term Fund Administrative are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Short-term Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Arrow Managed and Short-term Fund Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Arrow Managed and Short-term Fund

The main advantage of trading using opposite Arrow Managed and Short-term Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arrow Managed position performs unexpectedly, Short-term Fund 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 Short-term Fund will offset losses from the drop in Short-term Fund's long position.
The idea behind Arrow Managed Futures and Short Term Fund Administrative 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.

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