Correlation Between Arrow Electronics and Aegon NV
Can any of the company-specific risk be diversified away by investing in both Arrow Electronics and Aegon NV 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 Aegon NV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arrow Electronics and Aegon NV ADR, you can compare the effects of market volatilities on Arrow Electronics and Aegon NV 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 Aegon NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arrow Electronics and Aegon NV.
Diversification Opportunities for Arrow Electronics and Aegon NV
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Arrow and Aegon is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Electronics and Aegon NV ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aegon NV ADR 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 Aegon NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aegon NV ADR has no effect on the direction of Arrow Electronics i.e., Arrow Electronics and Aegon NV go up and down completely randomly.
Pair Corralation between Arrow Electronics and Aegon NV
Considering the 90-day investment horizon Arrow Electronics is expected to under-perform the Aegon NV. In addition to that, Arrow Electronics is 1.56 times more volatile than Aegon NV ADR. It trades about -0.2 of its total potential returns per unit of risk. Aegon NV ADR is currently generating about 0.22 per unit of volatility. If you would invest 637.00 in Aegon NV ADR on November 18, 2024 and sell it today you would earn a total of 29.00 from holding Aegon NV ADR or generate 4.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arrow Electronics vs. Aegon NV ADR
Performance |
| Timeline |
| Arrow Electronics |
| Aegon NV ADR |
Arrow Electronics and Aegon NV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arrow Electronics and Aegon NV
The main advantage of trading using opposite Arrow Electronics and Aegon NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arrow Electronics position performs unexpectedly, Aegon NV 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 Aegon NV will offset losses from the drop in Aegon NV's long position.| Arrow Electronics vs. Insight Enterprises | Arrow Electronics vs. Synnex | Arrow Electronics vs. Climb Global Solutions | Arrow Electronics vs. ScanSource |
| Aegon NV vs. Hartford Financial Services | Aegon NV vs. Goosehead Insurance | Aegon NV vs. International General Insurance | Aegon NV vs. Enstar Group 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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