Correlation Between United Insurance and Arrow Electronics
Can any of the company-specific risk be diversified away by investing in both United Insurance 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 United Insurance and Arrow Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Insurance Holdings and Arrow Electronics, you can compare the effects of market volatilities on United Insurance 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 United Insurance with a short position of Arrow Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Insurance and Arrow Electronics.
Diversification Opportunities for United Insurance and Arrow Electronics
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between United and Arrow is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding United Insurance Holdings and Arrow Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Electronics and United Insurance 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 United Insurance Holdings 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 United Insurance i.e., United Insurance and Arrow Electronics go up and down completely randomly.
Pair Corralation between United Insurance and Arrow Electronics
Assuming the 90 days horizon United Insurance Holdings is expected to generate 1.43 times more return on investment than Arrow Electronics. However, United Insurance is 1.43 times more volatile than Arrow Electronics. It trades about 0.13 of its potential returns per unit of risk. Arrow Electronics is currently generating about 0.14 per unit of risk. If you would invest 1,240 in United Insurance Holdings on September 13, 2024 and sell it today you would earn a total of 70.00 from holding United Insurance Holdings or generate 5.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Insurance Holdings vs. Arrow Electronics
Performance |
| Timeline |
| United Insurance Holdings |
| Arrow Electronics |
United Insurance and Arrow Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Insurance and Arrow Electronics
The main advantage of trading using opposite United Insurance and Arrow Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Insurance 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.| United Insurance vs. QBE Insurance Group | United Insurance vs. Insurance Australia Group | United Insurance vs. Superior Plus Corp | United Insurance vs. SIVERS SEMICONDUCTORS AB |
| Arrow Electronics vs. DICKER DATA LTD | Arrow Electronics vs. KAGA EL LTD | Arrow Electronics vs. Wayside Technology 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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