Correlation Between INPOST SA and ARROW ELECTRONICS
Can any of the company-specific risk be diversified away by investing in both INPOST SA 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 INPOST SA and ARROW ELECTRONICS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INPOST SA EO and ARROW ELECTRONICS, you can compare the effects of market volatilities on INPOST SA 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 INPOST SA with a short position of ARROW ELECTRONICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of INPOST SA and ARROW ELECTRONICS.
Diversification Opportunities for INPOST SA and ARROW ELECTRONICS
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between INPOST and ARROW is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding INPOST SA EO and ARROW ELECTRONICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARROW ELECTRONICS and INPOST SA 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 INPOST SA EO 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 INPOST SA i.e., INPOST SA and ARROW ELECTRONICS go up and down completely randomly.
Pair Corralation between INPOST SA and ARROW ELECTRONICS
Assuming the 90 days horizon INPOST SA EO is expected to generate 0.42 times more return on investment than ARROW ELECTRONICS. However, INPOST SA EO is 2.36 times less risky than ARROW ELECTRONICS. It trades about -0.15 of its potential returns per unit of risk. ARROW ELECTRONICS is currently generating about -0.07 per unit of risk. If you would invest 1,823 in INPOST SA EO on August 26, 2024 and sell it today you would lose (90.00) from holding INPOST SA EO or give up 4.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
INPOST SA EO vs. ARROW ELECTRONICS
Performance |
| Timeline |
| INPOST SA EO |
| ARROW ELECTRONICS |
INPOST SA and ARROW ELECTRONICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INPOST SA and ARROW ELECTRONICS
The main advantage of trading using opposite INPOST SA and ARROW ELECTRONICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INPOST SA 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's long position.| INPOST SA vs. GameStop Corp | INPOST SA vs. GAMING FAC SA | INPOST SA vs. Media and Games | INPOST SA vs. Sporttotal AG |
| ARROW ELECTRONICS vs. Apple Inc | ARROW ELECTRONICS vs. Apple Inc | ARROW ELECTRONICS vs. Apple Inc | ARROW ELECTRONICS vs. Apple Inc |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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