Correlation Between Arrow Electronics and GE Vernova
Can any of the company-specific risk be diversified away by investing in both Arrow Electronics and GE Vernova 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 GE Vernova into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arrow Electronics and GE Vernova LLC, you can compare the effects of market volatilities on Arrow Electronics and GE Vernova 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 GE Vernova. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arrow Electronics and GE Vernova.
Diversification Opportunities for Arrow Electronics and GE Vernova
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Arrow and GEV is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Electronics and GE Vernova LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GE Vernova LLC 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 GE Vernova. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GE Vernova LLC has no effect on the direction of Arrow Electronics i.e., Arrow Electronics and GE Vernova go up and down completely randomly.
Pair Corralation between Arrow Electronics and GE Vernova
Considering the 90-day investment horizon Arrow Electronics is expected to under-perform the GE Vernova. But the stock apears to be less risky and, when comparing its historical volatility, Arrow Electronics is 2.25 times less risky than GE Vernova. The stock trades about -0.02 of its potential returns per unit of risk. The GE Vernova LLC is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 30,109 in GE Vernova LLC on September 2, 2024 and sell it today you would earn a total of 3,303 from holding GE Vernova LLC or generate 10.97% 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. GE Vernova LLC
Performance |
| Timeline |
| Arrow Electronics |
| GE Vernova LLC |
Arrow Electronics and GE Vernova Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arrow Electronics and GE Vernova
The main advantage of trading using opposite Arrow Electronics and GE Vernova positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arrow Electronics position performs unexpectedly, GE Vernova 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 GE Vernova will offset losses from the drop in GE Vernova's long position.| Arrow Electronics vs. Avnet Inc | Arrow Electronics vs. Synnex | Arrow Electronics vs. Ingram Micro Holding | Arrow Electronics vs. Insight Enterprises |
| GE Vernova vs. Sonos Inc | GE Vernova vs. JD Sports Fashion | GE Vernova vs. Boston Properties | GE Vernova vs. Mid Atlantic Home Health |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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