Correlation Between AMG Advanced and Arrow Electronics
Can any of the company-specific risk be diversified away by investing in both AMG Advanced and Arrow Electronics 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 AMG Advanced and Arrow Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AMG Advanced Metallurgical and Arrow Electronics, you can compare the effects of market volatilities on AMG Advanced and Arrow Electronics 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 AMG Advanced with a short position of Arrow Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMG Advanced and Arrow Electronics.
Diversification Opportunities for AMG Advanced and Arrow Electronics
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between AMG and Arrow is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding AMG Advanced Metallurgical and Arrow Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Electronics and AMG Advanced 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 AMG Advanced Metallurgical are associated (or correlated) with Arrow Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrow Electronics has no effect on the direction of AMG Advanced i.e., AMG Advanced and Arrow Electronics go up and down completely randomly.
Pair Corralation between AMG Advanced and Arrow Electronics
Assuming the 90 days trading horizon AMG Advanced Metallurgical is expected to generate 1.37 times more return on investment than Arrow Electronics. However, AMG Advanced is 1.37 times more volatile than Arrow Electronics. It trades about -0.21 of its potential returns per unit of risk. Arrow Electronics is currently generating about -0.36 per unit of risk. If you would invest 1,548 in AMG Advanced Metallurgical on October 10, 2024 and sell it today you would lose (119.00) from holding AMG Advanced Metallurgical or give up 7.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.24% |
| Values | Daily Returns |
AMG Advanced Metallurgical vs. Arrow Electronics
Performance |
| Timeline |
| AMG Advanced Metallu |
| Arrow Electronics |
AMG Advanced and Arrow Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AMG Advanced and Arrow Electronics
The main advantage of trading using opposite AMG Advanced and Arrow Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMG Advanced position performs unexpectedly, Arrow Electronics 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 Electronics will offset losses from the drop in Arrow Electronics' long position.| AMG Advanced vs. Vitec Software Group | AMG Advanced vs. Take Two Interactive Software | AMG Advanced vs. Primorus Investments plc | AMG Advanced vs. FC Investment Trust |
| Arrow Electronics vs. Odfjell Drilling | Arrow Electronics vs. Alfa Financial Software | Arrow Electronics vs. Axway Software SA | Arrow Electronics vs. Impax Asset Management |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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