Correlation Between ARROW ELECTRONICS and Skandinaviska Enskilda
Can any of the company-specific risk be diversified away by investing in both ARROW ELECTRONICS and Skandinaviska Enskilda 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 Skandinaviska Enskilda into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ARROW ELECTRONICS and Skandinaviska Enskilda Banken, you can compare the effects of market volatilities on ARROW ELECTRONICS and Skandinaviska Enskilda 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 Skandinaviska Enskilda. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARROW ELECTRONICS and Skandinaviska Enskilda.
Diversification Opportunities for ARROW ELECTRONICS and Skandinaviska Enskilda
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between ARROW and Skandinaviska is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding ARROW ELECTRONICS and Skandinaviska Enskilda Banken in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skandinaviska Enskilda 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 Skandinaviska Enskilda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skandinaviska Enskilda has no effect on the direction of ARROW ELECTRONICS i.e., ARROW ELECTRONICS and Skandinaviska Enskilda go up and down completely randomly.
Pair Corralation between ARROW ELECTRONICS and Skandinaviska Enskilda
Assuming the 90 days trading horizon ARROW ELECTRONICS is expected to generate 6.8 times more return on investment than Skandinaviska Enskilda. However, ARROW ELECTRONICS is 6.8 times more volatile than Skandinaviska Enskilda Banken. It trades about 0.04 of its potential returns per unit of risk. Skandinaviska Enskilda Banken is currently generating about 0.08 per unit of risk. If you would invest 10,600 in ARROW ELECTRONICS on August 29, 2024 and sell it today you would earn a total of 800.00 from holding ARROW ELECTRONICS or generate 7.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ARROW ELECTRONICS vs. Skandinaviska Enskilda Banken
Performance |
| Timeline |
| ARROW ELECTRONICS |
| Skandinaviska Enskilda |
ARROW ELECTRONICS and Skandinaviska Enskilda Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ARROW ELECTRONICS and Skandinaviska Enskilda
The main advantage of trading using opposite ARROW ELECTRONICS and Skandinaviska Enskilda positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARROW ELECTRONICS position performs unexpectedly, Skandinaviska Enskilda 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 Skandinaviska Enskilda will offset losses from the drop in Skandinaviska Enskilda's long position.| ARROW ELECTRONICS vs. Host Hotels Resorts | ARROW ELECTRONICS vs. DALATA HOTEL | ARROW ELECTRONICS vs. Geratherm Medical AG | ARROW ELECTRONICS vs. Pebblebrook Hotel Trust |
| Skandinaviska Enskilda vs. Deutsche Bank Aktiengesellschaft | Skandinaviska Enskilda vs. Superior Plus Corp | Skandinaviska Enskilda vs. NMI Holdings | Skandinaviska Enskilda 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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