Correlation Between Arrow Electronics and Chesapeake Utilities
Can any of the company-specific risk be diversified away by investing in both Arrow Electronics and Chesapeake Utilities 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 Chesapeake Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arrow Electronics and Chesapeake Utilities, you can compare the effects of market volatilities on Arrow Electronics and Chesapeake Utilities 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 Chesapeake Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arrow Electronics and Chesapeake Utilities.
Diversification Opportunities for Arrow Electronics and Chesapeake Utilities
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Arrow and Chesapeake is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Electronics and Chesapeake Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chesapeake Utilities 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 Chesapeake Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chesapeake Utilities has no effect on the direction of Arrow Electronics i.e., Arrow Electronics and Chesapeake Utilities go up and down completely randomly.
Pair Corralation between Arrow Electronics and Chesapeake Utilities
Assuming the 90 days horizon Arrow Electronics is expected to generate 2.89 times less return on investment than Chesapeake Utilities. In addition to that, Arrow Electronics is 1.14 times more volatile than Chesapeake Utilities. It trades about 0.11 of its total potential returns per unit of risk. Chesapeake Utilities is currently generating about 0.37 per unit of volatility. If you would invest 10,700 in Chesapeake Utilities on September 3, 2024 and sell it today you would earn a total of 1,600 from holding Chesapeake Utilities or generate 14.95% 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. Chesapeake Utilities
Performance |
| Timeline |
| Arrow Electronics |
| Chesapeake Utilities |
Arrow Electronics and Chesapeake Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arrow Electronics and Chesapeake Utilities
The main advantage of trading using opposite Arrow Electronics and Chesapeake Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arrow Electronics position performs unexpectedly, Chesapeake Utilities 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 Chesapeake Utilities will offset losses from the drop in Chesapeake Utilities' long position.| Arrow Electronics vs. DICKER DATA LTD | Arrow Electronics vs. KAGA EL LTD | Arrow Electronics vs. Wayside Technology Group | Arrow Electronics vs. INNELEC MULTIMMINHEO153 |
| Chesapeake Utilities vs. ENN Energy Holdings | Chesapeake Utilities vs. Superior Plus Corp | Chesapeake Utilities vs. NMI Holdings | Chesapeake Utilities vs. Origin Agritech |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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