Correlation Between Arrow Electronics and Flexible Solutions
Can any of the company-specific risk be diversified away by investing in both Arrow Electronics and Flexible Solutions 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 Flexible Solutions into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arrow Electronics and Flexible Solutions International, you can compare the effects of market volatilities on Arrow Electronics and Flexible Solutions 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 Flexible Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arrow Electronics and Flexible Solutions.
Diversification Opportunities for Arrow Electronics and Flexible Solutions
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Arrow and Flexible is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Electronics and Flexible Solutions Internation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flexible Solutions 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 Flexible Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flexible Solutions has no effect on the direction of Arrow Electronics i.e., Arrow Electronics and Flexible Solutions go up and down completely randomly.
Pair Corralation between Arrow Electronics and Flexible Solutions
Considering the 90-day investment horizon Arrow Electronics is expected to generate 0.34 times more return on investment than Flexible Solutions. However, Arrow Electronics is 2.94 times less risky than Flexible Solutions. It trades about 0.1 of its potential returns per unit of risk. Flexible Solutions International is currently generating about 0.01 per unit of risk. If you would invest 11,913 in Arrow Electronics on September 4, 2024 and sell it today you would earn a total of 347.00 from holding Arrow Electronics or generate 2.91% 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. Flexible Solutions Internation
Performance |
| Timeline |
| Arrow Electronics |
| Flexible Solutions |
Arrow Electronics and Flexible Solutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arrow Electronics and Flexible Solutions
The main advantage of trading using opposite Arrow Electronics and Flexible Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arrow Electronics position performs unexpectedly, Flexible Solutions 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 Flexible Solutions will offset losses from the drop in Flexible Solutions' long position.| Arrow Electronics vs. Insight Enterprises | Arrow Electronics vs. ScanSource | Arrow Electronics vs. PC Connection | Arrow Electronics vs. Aquagold International |
| Flexible Solutions vs. Innospec | Flexible Solutions vs. Oil Dri | Flexible Solutions vs. H B Fuller | Flexible Solutions vs. Quaker Chemical |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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