Correlation Between Arrow Electronics and FC Investment
Can any of the company-specific risk be diversified away by investing in both Arrow Electronics and FC Investment 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 FC Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arrow Electronics and FC Investment Trust, you can compare the effects of market volatilities on Arrow Electronics and FC Investment 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 FC Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arrow Electronics and FC Investment.
Diversification Opportunities for Arrow Electronics and FC Investment
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Arrow and FCIT is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Electronics and FC Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FC Investment Trust 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 FC Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FC Investment Trust has no effect on the direction of Arrow Electronics i.e., Arrow Electronics and FC Investment go up and down completely randomly.
Pair Corralation between Arrow Electronics and FC Investment
Assuming the 90 days trading horizon Arrow Electronics is expected to generate 1.2 times less return on investment than FC Investment. In addition to that, Arrow Electronics is 1.89 times more volatile than FC Investment Trust. It trades about 0.02 of its total potential returns per unit of risk. FC Investment Trust is currently generating about 0.06 per unit of volatility. If you would invest 89,391 in FC Investment Trust on August 26, 2024 and sell it today you would earn a total of 22,809 from holding FC Investment Trust or generate 25.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 91.22% |
| Values | Daily Returns |
Arrow Electronics vs. FC Investment Trust
Performance |
| Timeline |
| Arrow Electronics |
| FC Investment Trust |
Arrow Electronics and FC Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arrow Electronics and FC Investment
The main advantage of trading using opposite Arrow Electronics and FC Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arrow Electronics position performs unexpectedly, FC Investment 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 FC Investment will offset losses from the drop in FC Investment's long position.| Arrow Electronics vs. Allianz Technology Trust | Arrow Electronics vs. Gaming Realms plc | Arrow Electronics vs. Pfeiffer Vacuum Technology | Arrow Electronics vs. Greenroc Mining PLC |
| FC Investment vs. Centaur Media | FC Investment vs. Samsung Electronics Co | FC Investment vs. Arrow Electronics | FC Investment vs. Catalyst Media 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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