Correlation Between ARROW ELECTRONICS and Choice Hotels
Can any of the company-specific risk be diversified away by investing in both ARROW ELECTRONICS and Choice Hotels 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 Choice Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ARROW ELECTRONICS and Choice Hotels International, you can compare the effects of market volatilities on ARROW ELECTRONICS and Choice Hotels 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 Choice Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARROW ELECTRONICS and Choice Hotels.
Diversification Opportunities for ARROW ELECTRONICS and Choice Hotels
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ARROW and Choice is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding ARROW ELECTRONICS and Choice Hotels International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Choice Hotels Intern 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 Choice Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Choice Hotels Intern has no effect on the direction of ARROW ELECTRONICS i.e., ARROW ELECTRONICS and Choice Hotels go up and down completely randomly.
Pair Corralation between ARROW ELECTRONICS and Choice Hotels
Assuming the 90 days trading horizon ARROW ELECTRONICS is expected to generate 6.6 times more return on investment than Choice Hotels. However, ARROW ELECTRONICS is 6.6 times more volatile than Choice Hotels International. It trades about 0.03 of its potential returns per unit of risk. Choice Hotels International is currently generating about 0.04 per unit of risk. If you would invest 10,100 in ARROW ELECTRONICS on August 30, 2024 and sell it today you would earn a total of 1,200 from holding ARROW ELECTRONICS or generate 11.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ARROW ELECTRONICS vs. Choice Hotels International
Performance |
| Timeline |
| ARROW ELECTRONICS |
| Choice Hotels Intern |
ARROW ELECTRONICS and Choice Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ARROW ELECTRONICS and Choice Hotels
The main advantage of trading using opposite ARROW ELECTRONICS and Choice Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARROW ELECTRONICS position performs unexpectedly, Choice Hotels 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 Choice Hotels will offset losses from the drop in Choice Hotels' long position.| ARROW ELECTRONICS vs. Apple Inc | ARROW ELECTRONICS vs. Apple Inc | ARROW ELECTRONICS vs. Superior Plus Corp | ARROW ELECTRONICS vs. SIVERS SEMICONDUCTORS AB |
| Choice Hotels vs. FIREWEED METALS P | Choice Hotels vs. LION ONE METALS | Choice Hotels vs. PARKEN Sport Entertainment | Choice Hotels 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
Other Complementary Tools
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings |