are there arbitrage opportunities between the two

If SBD is out of peg (which is now for over a month) yes, there are. If these "arbitrage opportunities" are continuing for a while, the price can be hurt really bad. So witnesses - including me - are adjusting their price feed bias, in order for more SBD to be printed. The logic behind this move is: the bigger the supply of something, the lower the price. When the SBD pump started, the total supply of SBD was around 3.5 million, now is around 4.5 million. I would say that this measure of witnesses is working - not as well as we would like it to work, but it's working.

The fundamental thing you need to understand about SBD is that it's not "hard pegged" to the USD (there is no USD kept in cold storage, "mirroring" the SBD supply 1 to 1), but it's "soft pegged" to "$1 worth of STEEM". It's a debt instrument.