Correlation Between Arrow Electronics and CVR Energy
Can any of the company-specific risk be diversified away by investing in both Arrow Electronics and CVR Energy 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 Electronics and CVR Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arrow Electronics and CVR Energy, you can compare the effects of market volatilities on Arrow Electronics and CVR Energy 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 Electronics with a short position of CVR Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arrow Electronics and CVR Energy.
Diversification Opportunities for Arrow Electronics and CVR Energy
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Arrow and CVR is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Electronics and CVR Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVR Energy and Arrow Electronics 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 Electronics are associated (or correlated) with CVR Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVR Energy has no effect on the direction of Arrow Electronics i.e., Arrow Electronics and CVR Energy go up and down completely randomly.
Pair Corralation between Arrow Electronics and CVR Energy
Assuming the 90 days trading horizon Arrow Electronics is expected to generate 0.49 times more return on investment than CVR Energy. However, Arrow Electronics is 2.03 times less risky than CVR Energy. It trades about -0.11 of its potential returns per unit of risk. CVR Energy is currently generating about -0.13 per unit of risk. If you would invest 13,416 in Arrow Electronics on August 27, 2024 and sell it today you would lose (1,176) from holding Arrow Electronics or give up 8.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arrow Electronics vs. CVR Energy
Performance |
| Timeline |
| Arrow Electronics |
| CVR Energy |
Arrow Electronics and CVR Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arrow Electronics and CVR Energy
The main advantage of trading using opposite Arrow Electronics and CVR Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arrow Electronics position performs unexpectedly, CVR Energy 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 CVR Energy will offset losses from the drop in CVR Energy's long position.| Arrow Electronics vs. Samsung Electronics Co | Arrow Electronics vs. Samsung Electronics Co | Arrow Electronics vs. Hyundai Motor | Arrow Electronics vs. Toyota Motor Corp |
| CVR Energy vs. Arrow Electronics | CVR Energy vs. Public Storage | CVR Energy vs. Direct Line Insurance | CVR Energy vs. Scandinavian Tobacco Group |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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