Correlation Between Compagnie Plastic and Arrow Electronics
Can any of the company-specific risk be diversified away by investing in both Compagnie Plastic 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 Compagnie Plastic and Arrow Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compagnie Plastic Omnium and Arrow Electronics, you can compare the effects of market volatilities on Compagnie Plastic 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 Compagnie Plastic with a short position of Arrow Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie Plastic and Arrow Electronics.
Diversification Opportunities for Compagnie Plastic and Arrow Electronics
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Compagnie and Arrow is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie Plastic Omnium and Arrow Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Electronics and Compagnie Plastic 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 Compagnie Plastic Omnium 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 Compagnie Plastic i.e., Compagnie Plastic and Arrow Electronics go up and down completely randomly.
Pair Corralation between Compagnie Plastic and Arrow Electronics
Assuming the 90 days trading horizon Compagnie Plastic Omnium is expected to under-perform the Arrow Electronics. But the stock apears to be less risky and, when comparing its historical volatility, Compagnie Plastic Omnium is 1.09 times less risky than Arrow Electronics. The stock trades about -0.19 of its potential returns per unit of risk. The Arrow Electronics is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest 13,454 in Arrow Electronics on August 30, 2024 and sell it today you would lose (1,437) from holding Arrow Electronics or give up 10.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compagnie Plastic Omnium vs. Arrow Electronics
Performance |
| Timeline |
| Compagnie Plastic Omnium |
| Arrow Electronics |
Compagnie Plastic and Arrow Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compagnie Plastic and Arrow Electronics
The main advantage of trading using opposite Compagnie Plastic and Arrow Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compagnie Plastic 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.| Compagnie Plastic vs. Tungsten West PLC | Compagnie Plastic vs. Argo Group Limited | Compagnie Plastic vs. Hardide PLC | Compagnie Plastic vs. Versarien PLC |
| Arrow Electronics vs. Tungsten West PLC | Arrow Electronics vs. Argo Group Limited | Arrow Electronics vs. Hardide PLC | Arrow Electronics vs. Versarien 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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