Correlation Between Interactive Brokers and Arlington Asset

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

By analyzing existing cross correlation between Interactive Brokers Group and Arlington Asset Investment, you can compare the effects of market volatilities on Interactive Brokers and Arlington Asset 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 Interactive Brokers with a short position of Arlington Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Interactive Brokers and Arlington Asset.

Diversification Opportunities for Interactive Brokers and Arlington Asset

0.3

Correlation Coefficient

Interactive Brokers  Arlington Asset

Weak diversification

The 3 months correlation between Interactive and Arlington is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Interactive Brokers Group and Arlington Asset Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arlington Asset Inve and Interactive Brokers 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 Interactive Brokers Group are associated (or correlated) with Arlington Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arlington Asset Inve has no effect on the direction of Interactive Brokers i.e., Interactive Brokers and Arlington Asset go up and down completely randomly.

Pair Corralation between Interactive Brokers and Arlington Asset

If you would invest  10,880  in Interactive Brokers Group on January 20, 2024 and sell it today you would earn a total of  180.00  from holding Interactive Brokers Group or generate 1.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	4.55%
Values	Daily Returns

Interactive Brokers Group  vs.  Arlington Asset Investment

Interactive Brokers

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Interactive Brokers Group are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating forward-looking signals, Interactive Brokers reported solid returns over the last few months and may actually be approaching a breakup point.

Arlington Asset Inve

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arlington Asset Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, Arlington Asset is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Interactive Brokers and Arlington Asset

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

The idea behind Interactive Brokers Group and Arlington Asset Investment 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.