Correlation Between Arrow Electronics and Canaan
Can any of the company-specific risk be diversified away by investing in both Arrow Electronics and Canaan 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 Canaan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arrow Electronics and Canaan Inc, you can compare the effects of market volatilities on Arrow Electronics and Canaan 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 Canaan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arrow Electronics and Canaan.
Diversification Opportunities for Arrow Electronics and Canaan
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Arrow and Canaan is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Electronics and Canaan Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canaan Inc 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 Canaan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canaan Inc has no effect on the direction of Arrow Electronics i.e., Arrow Electronics and Canaan go up and down completely randomly.
Pair Corralation between Arrow Electronics and Canaan
Considering the 90-day investment horizon Arrow Electronics is expected to under-perform the Canaan. But the stock apears to be less risky and, when comparing its historical volatility, Arrow Electronics is 3.94 times less risky than Canaan. The stock trades about -0.15 of its potential returns per unit of risk. The Canaan Inc is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 130.00 in Canaan Inc on August 30, 2024 and sell it today you would earn a total of 50.00 from holding Canaan Inc or generate 38.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Arrow Electronics vs. Canaan Inc
Performance |
| Timeline |
| Arrow Electronics |
| Canaan Inc |
Arrow Electronics and Canaan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arrow Electronics and Canaan
The main advantage of trading using opposite Arrow Electronics and Canaan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arrow Electronics position performs unexpectedly, Canaan 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 Canaan will offset losses from the drop in Canaan's long position.| Arrow Electronics vs. Insight Enterprises | Arrow Electronics vs. Synnex | Arrow Electronics vs. PC Connection |
| Canaan vs. 3D Systems | Canaan vs. NetApp Inc | Canaan vs. Rigetti Computing | Canaan vs. Logitech International SA |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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