Correlation Between Arrow Electronics and Fossil
Can any of the company-specific risk be diversified away by investing in both Arrow Electronics and Fossil 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 Fossil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arrow Electronics and Fossil Group, you can compare the effects of market volatilities on Arrow Electronics and Fossil 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 Fossil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arrow Electronics and Fossil.
Diversification Opportunities for Arrow Electronics and Fossil
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Arrow and Fossil is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Electronics and Fossil Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fossil Group 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 Fossil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fossil Group has no effect on the direction of Arrow Electronics i.e., Arrow Electronics and Fossil go up and down completely randomly.
Pair Corralation between Arrow Electronics and Fossil
Considering the 90-day investment horizon Arrow Electronics is expected to generate 0.33 times more return on investment than Fossil. However, Arrow Electronics is 3.04 times less risky than Fossil. It trades about 0.02 of its potential returns per unit of risk. Fossil Group is currently generating about -0.02 per unit of risk. If you would invest 10,868 in Arrow Electronics on September 2, 2024 and sell it today you would earn a total of 1,148 from holding Arrow Electronics or generate 10.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arrow Electronics vs. Fossil Group
Performance |
| Timeline |
| Arrow Electronics |
| Fossil Group |
Arrow Electronics and Fossil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arrow Electronics and Fossil
The main advantage of trading using opposite Arrow Electronics and Fossil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arrow Electronics position performs unexpectedly, Fossil 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 Fossil will offset losses from the drop in Fossil's long position.| Arrow Electronics vs. Avnet Inc | Arrow Electronics vs. Synnex | Arrow Electronics vs. Ingram Micro Holding | Arrow Electronics vs. Insight Enterprises |
| Fossil vs. Lanvin Group Holdings | Fossil vs. Signet Jewelers | Fossil vs. Tapestry | Fossil vs. Capri Holdings |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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