Correlation Between Arrow Financial and CompoSecure

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

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

Diversification Opportunities for Arrow Financial and CompoSecure

0.88

Correlation Coefficient

Arrow Financial  CompoSecure

Very poor diversification

The 3 months correlation between Arrow and CompoSecure is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Financial and CompoSecure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CompoSecure 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 CompoSecure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CompoSecure has no effect on the direction of Arrow Financial i.e., Arrow Financial and CompoSecure go up and down completely randomly.

Pair Corralation between Arrow Financial and CompoSecure

Given the investment horizon of 90 days Arrow Financial is expected to generate 5.83 times less return on investment than CompoSecure. But when comparing it to its historical volatility, Arrow Financial is 4.07 times less risky than CompoSecure. It trades about 0.11 of its potential returns per unit of risk. CompoSecure is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  626.00  in CompoSecure on June 12, 2025 and sell it today you would earn a total of  467.00  from holding CompoSecure or generate 74.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.36%
Values	Daily Returns

Arrow Financial  vs.  CompoSecure

Arrow Financial

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Arrow Financial are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Arrow Financial may actually be approaching a critical reversion point that can send shares even higher in October 2025.

CompoSecure

Risk-Adjusted Performance

Good

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

Pair Trading with Arrow Financial and CompoSecure

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

The idea behind Arrow Financial and CompoSecure 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.

Check out your portfolio center.

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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.