Correlation Between Arrow Electronics and Atlantic American
Can any of the company-specific risk be diversified away by investing in both Arrow Electronics and Atlantic American 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 Atlantic American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arrow Electronics and Atlantic American, you can compare the effects of market volatilities on Arrow Electronics and Atlantic American 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 Atlantic American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arrow Electronics and Atlantic American.
Diversification Opportunities for Arrow Electronics and Atlantic American
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Arrow and Atlantic is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Electronics and Atlantic American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlantic American 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 Atlantic American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlantic American has no effect on the direction of Arrow Electronics i.e., Arrow Electronics and Atlantic American go up and down completely randomly.
Pair Corralation between Arrow Electronics and Atlantic American
Considering the 90-day investment horizon Arrow Electronics is expected to under-perform the Atlantic American. But the stock apears to be less risky and, when comparing its historical volatility, Arrow Electronics is 1.88 times less risky than Atlantic American. The stock trades about -0.2 of its potential returns per unit of risk. The Atlantic American is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 148.00 in Atlantic American on November 18, 2024 and sell it today you would earn a total of 12.00 from holding Atlantic American or generate 8.11% 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. Atlantic American
Performance |
| Timeline |
| Arrow Electronics |
| Atlantic American |
Arrow Electronics and Atlantic American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arrow Electronics and Atlantic American
The main advantage of trading using opposite Arrow Electronics and Atlantic American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arrow Electronics position performs unexpectedly, Atlantic American 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 Atlantic American will offset losses from the drop in Atlantic American's long position.| Arrow Electronics vs. Insight Enterprises | Arrow Electronics vs. Synnex | Arrow Electronics vs. Climb Global Solutions | Arrow Electronics vs. ScanSource |
| Atlantic American vs. CNO Financial Group | Atlantic American vs. MetLife Preferred Stock | Atlantic American vs. FG Annuities Life | Atlantic American vs. Prudential PLC ADR |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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