Correlation Between Arm Holdings and Celestica
Can any of the company-specific risk be diversified away by investing in both Arm Holdings and Celestica 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 Arm Holdings and Celestica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arm Holdings plc and Celestica, you can compare the effects of market volatilities on Arm Holdings and Celestica 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 Arm Holdings with a short position of Celestica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arm Holdings and Celestica.
Diversification Opportunities for Arm Holdings and Celestica
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Arm and Celestica is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Arm Holdings plc and Celestica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celestica and Arm Holdings 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 Arm Holdings plc are associated (or correlated) with Celestica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Celestica has no effect on the direction of Arm Holdings i.e., Arm Holdings and Celestica go up and down completely randomly.
Pair Corralation between Arm Holdings and Celestica
Considering the 90-day investment horizon Arm Holdings plc is expected to generate 1.48 times more return on investment than Celestica. However, Arm Holdings is 1.48 times more volatile than Celestica. It trades about 0.27 of its potential returns per unit of risk. Celestica is currently generating about 0.36 per unit of risk. If you would invest 12,687 in Arm Holdings plc on October 22, 2024 and sell it today you would earn a total of 2,239 from holding Arm Holdings plc or generate 17.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arm Holdings plc vs. Celestica
Performance |
| Timeline |
| Arm Holdings plc |
| Celestica |
Arm Holdings and Celestica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arm Holdings and Celestica
The main advantage of trading using opposite Arm Holdings and Celestica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arm Holdings position performs unexpectedly, Celestica 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 Celestica will offset losses from the drop in Celestica's long position.| Arm Holdings vs. Celestica | Arm Holdings vs. Weibo Corp | Arm Holdings vs. NETGEAR | Arm Holdings vs. Coupang LLC |
| Celestica vs. Plexus Corp | Celestica vs. Benchmark Electronics | Celestica vs. Flex | Celestica vs. Jabil Circuit |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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