Correlation Between Arrow Electronics and Stora Enso
Can any of the company-specific risk be diversified away by investing in both Arrow Electronics and Stora Enso 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 Stora Enso into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arrow Electronics and Stora Enso Oyj, you can compare the effects of market volatilities on Arrow Electronics and Stora Enso 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 Stora Enso. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arrow Electronics and Stora Enso.
Diversification Opportunities for Arrow Electronics and Stora Enso
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Arrow and Stora is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Electronics and Stora Enso Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stora Enso Oyj 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 Stora Enso. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stora Enso Oyj has no effect on the direction of Arrow Electronics i.e., Arrow Electronics and Stora Enso go up and down completely randomly.
Pair Corralation between Arrow Electronics and Stora Enso
Assuming the 90 days horizon Arrow Electronics is expected to generate 1.33 times more return on investment than Stora Enso. However, Arrow Electronics is 1.33 times more volatile than Stora Enso Oyj. It trades about 0.27 of its potential returns per unit of risk. Stora Enso Oyj is currently generating about 0.05 per unit of risk. If you would invest 10,700 in Arrow Electronics on September 14, 2024 and sell it today you would earn a total of 1,000.00 from holding Arrow Electronics or generate 9.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arrow Electronics vs. Stora Enso Oyj
Performance |
| Timeline |
| Arrow Electronics |
| Stora Enso Oyj |
Arrow Electronics and Stora Enso Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arrow Electronics and Stora Enso
The main advantage of trading using opposite Arrow Electronics and Stora Enso positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arrow Electronics position performs unexpectedly, Stora Enso 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 Stora Enso will offset losses from the drop in Stora Enso's long position.| Arrow Electronics vs. DICKER DATA LTD | Arrow Electronics vs. KAGA EL LTD | Arrow Electronics vs. Wayside Technology Group |
| Stora Enso vs. STMICROELECTRONICS | Stora Enso vs. PT Global Mediacom | Stora Enso vs. Arrow Electronics | Stora Enso vs. PLAYSTUDIOS A DL 0001 |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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