Correlation Between Sligro Food and Arrow Electronics
Can any of the company-specific risk be diversified away by investing in both Sligro Food 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 Sligro Food and Arrow Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sligro Food Group and Arrow Electronics, you can compare the effects of market volatilities on Sligro Food 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 Sligro Food with a short position of Arrow Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sligro Food and Arrow Electronics.
Diversification Opportunities for Sligro Food and Arrow Electronics
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sligro and Arrow is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Sligro Food Group and Arrow Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Electronics and Sligro Food 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 Sligro Food Group 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 Sligro Food i.e., Sligro Food and Arrow Electronics go up and down completely randomly.
Pair Corralation between Sligro Food and Arrow Electronics
Assuming the 90 days trading horizon Sligro Food Group is expected to generate 0.33 times more return on investment than Arrow Electronics. However, Sligro Food Group is 3.08 times less risky than Arrow Electronics. It trades about -0.29 of its potential returns per unit of risk. Arrow Electronics is currently generating about -0.16 per unit of risk. If you would invest 1,169 in Sligro Food Group on August 31, 2024 and sell it today you would lose (80.00) from holding Sligro Food Group or give up 6.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sligro Food Group vs. Arrow Electronics
Performance |
| Timeline |
| Sligro Food Group |
| Arrow Electronics |
Sligro Food and Arrow Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sligro Food and Arrow Electronics
The main advantage of trading using opposite Sligro Food and Arrow Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sligro Food 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.| Sligro Food vs. Neometals | Sligro Food vs. Coor Service Management | Sligro Food vs. Aeorema Communications Plc | Sligro Food vs. JLEN Environmental Assets |
| Arrow Electronics vs. Oakley Capital Investments | Arrow Electronics vs. Monks Investment Trust | Arrow Electronics vs. FC Investment Trust | Arrow Electronics vs. Flutter Entertainment PLC |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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