Correlation Between Arrow Electronics and United Airlines
Can any of the company-specific risk be diversified away by investing in both Arrow Electronics and United Airlines 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 United Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arrow Electronics and United Airlines Holdings, you can compare the effects of market volatilities on Arrow Electronics and United Airlines 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 United Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arrow Electronics and United Airlines.
Diversification Opportunities for Arrow Electronics and United Airlines
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Arrow and United is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Electronics and United Airlines Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Airlines Holdings 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 United Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Airlines Holdings has no effect on the direction of Arrow Electronics i.e., Arrow Electronics and United Airlines go up and down completely randomly.
Pair Corralation between Arrow Electronics and United Airlines
Assuming the 90 days horizon Arrow Electronics is expected to generate 12.38 times less return on investment than United Airlines. But when comparing it to its historical volatility, Arrow Electronics is 1.58 times less risky than United Airlines. It trades about 0.01 of its potential returns per unit of risk. United Airlines Holdings is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 4,515 in United Airlines Holdings on October 13, 2024 and sell it today you would earn a total of 5,487 from holding United Airlines Holdings or generate 121.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arrow Electronics vs. United Airlines Holdings
Performance |
| Timeline |
| Arrow Electronics |
| United Airlines Holdings |
Arrow Electronics and United Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arrow Electronics and United Airlines
The main advantage of trading using opposite Arrow Electronics and United Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arrow Electronics position performs unexpectedly, United Airlines 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 United Airlines will offset losses from the drop in United Airlines' long position.| Arrow Electronics vs. Jacquet Metal Service | Arrow Electronics vs. Zijin Mining Group | Arrow Electronics vs. Western Copper and | Arrow Electronics vs. TRADEDOUBLER AB SK |
| United Airlines vs. LANDSEA GREEN MANAGEMENT | United Airlines vs. Coor Service Management | United Airlines vs. COFCO Joycome Foods | United Airlines vs. AGF Management Limited |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
Other Complementary Tools
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites |