Correlation Between CompoSecure and Arrow Financial

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

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

Diversification Opportunities for CompoSecure and Arrow Financial

0.45

Correlation Coefficient

CompoSecure  Arrow Financial

Very weak diversification

The 3 months correlation between CompoSecure and Arrow is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding CompoSecure and Arrow Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Financial and CompoSecure 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 CompoSecure are associated (or correlated) with Arrow Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrow Financial has no effect on the direction of CompoSecure i.e., CompoSecure and Arrow Financial go up and down completely randomly.

Pair Corralation between CompoSecure and Arrow Financial

Assuming the 90 days horizon CompoSecure is expected to generate 4.34 times more return on investment than Arrow Financial. However, CompoSecure is 4.34 times more volatile than Arrow Financial. It trades about 0.21 of its potential returns per unit of risk. Arrow Financial is currently generating about 0.04 per unit of risk. If you would invest  477.00  in CompoSecure on May 13, 2025 and sell it today you would earn a total of  518.00  from holding CompoSecure or generate 108.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

CompoSecure  vs.  Arrow Financial

CompoSecure

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CompoSecure are ranked lower than 16 (%) 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.

Arrow Financial

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Arrow Financial are ranked lower than 3 (%) 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.

Pair Trading with CompoSecure and Arrow Financial

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

The idea behind CompoSecure and Arrow Financial 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.