Correlation Between ARROW ELECTRONICS and Samsung Electronics
Can any of the company-specific risk be diversified away by investing in both ARROW ELECTRONICS and Samsung Electronics 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 Samsung Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ARROW ELECTRONICS and Samsung Electronics Co, you can compare the effects of market volatilities on ARROW ELECTRONICS and Samsung Electronics 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 Samsung Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARROW ELECTRONICS and Samsung Electronics.
Diversification Opportunities for ARROW ELECTRONICS and Samsung Electronics
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between ARROW and Samsung is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding ARROW ELECTRONICS and Samsung Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Electronics 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 Samsung Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung Electronics has no effect on the direction of ARROW ELECTRONICS i.e., ARROW ELECTRONICS and Samsung Electronics go up and down completely randomly.
Pair Corralation between ARROW ELECTRONICS and Samsung Electronics
Assuming the 90 days trading horizon ARROW ELECTRONICS is expected to generate 6.26 times more return on investment than Samsung Electronics. However, ARROW ELECTRONICS is 6.26 times more volatile than Samsung Electronics Co. It trades about 0.03 of its potential returns per unit of risk. Samsung Electronics Co is currently generating about 0.0 per unit of risk. If you would invest 9,950 in ARROW ELECTRONICS on August 27, 2024 and sell it today you would earn a total of 1,450 from holding ARROW ELECTRONICS or generate 14.57% 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. Samsung Electronics Co
Performance |
| Timeline |
| ARROW ELECTRONICS |
| Samsung Electronics |
ARROW ELECTRONICS and Samsung Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ARROW ELECTRONICS and Samsung Electronics
The main advantage of trading using opposite ARROW ELECTRONICS and Samsung Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARROW ELECTRONICS position performs unexpectedly, Samsung Electronics 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 Samsung Electronics will offset losses from the drop in Samsung Electronics' long position.| ARROW ELECTRONICS vs. Apple Inc | ARROW ELECTRONICS vs. Apple Inc | ARROW ELECTRONICS vs. Apple Inc | ARROW ELECTRONICS vs. Microsoft |
| Samsung Electronics vs. Amazon Inc | Samsung Electronics vs. Microsoft | Samsung Electronics vs. Tesla Inc | Samsung Electronics vs. Alphabet Class A |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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