Correlation Between Arrow Electronics and Amazon
Can any of the company-specific risk be diversified away by investing in both Arrow Electronics and Amazon 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 Arrow Electronics and Amazon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arrow Electronics and Amazon Inc, you can compare the effects of market volatilities on Arrow Electronics and Amazon 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 Arrow Electronics with a short position of Amazon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arrow Electronics and Amazon.
Diversification Opportunities for Arrow Electronics and Amazon
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Arrow and Amazon is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Electronics and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc and Arrow Electronics 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 Arrow Electronics are associated (or correlated) with Amazon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazon Inc has no effect on the direction of Arrow Electronics i.e., Arrow Electronics and Amazon go up and down completely randomly.
Pair Corralation between Arrow Electronics and Amazon
Assuming the 90 days horizon Arrow Electronics is expected to generate 3.2 times less return on investment than Amazon. In addition to that, Arrow Electronics is 1.06 times more volatile than Amazon Inc. It trades about 0.05 of its total potential returns per unit of risk. Amazon Inc is currently generating about 0.16 per unit of volatility. If you would invest 18,260 in Amazon Inc on September 2, 2024 and sell it today you would earn a total of 1,280 from holding Amazon Inc or generate 7.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arrow Electronics vs. Amazon Inc
Performance |
| Timeline |
| Arrow Electronics |
| Amazon Inc |
Arrow Electronics and Amazon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arrow Electronics and Amazon
The main advantage of trading using opposite Arrow Electronics and Amazon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arrow Electronics position performs unexpectedly, Amazon 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 Amazon will offset losses from the drop in Amazon's long position.| Arrow Electronics vs. Enter Air SA | Arrow Electronics vs. Entravision Communications | Arrow Electronics vs. Spirent Communications plc | Arrow Electronics vs. Ribbon Communications |
| Amazon vs. Richardson Electronics | Amazon vs. Mobilezone Holding AG | Amazon vs. METHODE ELECTRONICS | Amazon vs. Arrow Electronics |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
Other Complementary Tools
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets |