Correlation Between Arrow Electronics and Biglari Holdings
Can any of the company-specific risk be diversified away by investing in both Arrow Electronics and Biglari Holdings 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 Biglari Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arrow Electronics and Biglari Holdings, you can compare the effects of market volatilities on Arrow Electronics and Biglari Holdings 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 Biglari Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arrow Electronics and Biglari Holdings.
Diversification Opportunities for Arrow Electronics and Biglari Holdings
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Arrow and Biglari is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Electronics and Biglari Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biglari Holdings 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 Biglari Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biglari Holdings has no effect on the direction of Arrow Electronics i.e., Arrow Electronics and Biglari Holdings go up and down completely randomly.
Pair Corralation between Arrow Electronics and Biglari Holdings
Considering the 90-day investment horizon Arrow Electronics is expected to generate 7.46 times less return on investment than Biglari Holdings. But when comparing it to its historical volatility, Arrow Electronics is 1.97 times less risky than Biglari Holdings. It trades about 0.1 of its potential returns per unit of risk. Biglari Holdings is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 17,300 in Biglari Holdings on September 4, 2024 and sell it today you would earn a total of 4,304 from holding Biglari Holdings or generate 24.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arrow Electronics vs. Biglari Holdings
Performance |
| Timeline |
| Arrow Electronics |
| Biglari Holdings |
Arrow Electronics and Biglari Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arrow Electronics and Biglari Holdings
The main advantage of trading using opposite Arrow Electronics and Biglari Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arrow Electronics position performs unexpectedly, Biglari Holdings 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 Biglari Holdings will offset losses from the drop in Biglari Holdings' long position.| Arrow Electronics vs. Insight Enterprises | Arrow Electronics vs. ScanSource | Arrow Electronics vs. PC Connection | Arrow Electronics vs. Aquagold International |
| Biglari Holdings vs. Hyatt Hotels | Biglari Holdings vs. Smart Share Global | Biglari Holdings vs. Sweetgreen | Biglari Holdings vs. Wyndham Hotels Resorts |
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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