Correlation Between Arrow Electronics and Pekin Life
Can any of the company-specific risk be diversified away by investing in both Arrow Electronics and Pekin Life 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 Pekin Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arrow Electronics and Pekin Life Insurance, you can compare the effects of market volatilities on Arrow Electronics and Pekin Life 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 Pekin Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arrow Electronics and Pekin Life.
Diversification Opportunities for Arrow Electronics and Pekin Life
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Arrow and Pekin is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Electronics and Pekin Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pekin Life Insurance 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 Pekin Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pekin Life Insurance has no effect on the direction of Arrow Electronics i.e., Arrow Electronics and Pekin Life go up and down completely randomly.
Pair Corralation between Arrow Electronics and Pekin Life
Considering the 90-day investment horizon Arrow Electronics is expected to generate 0.95 times more return on investment than Pekin Life. However, Arrow Electronics is 1.05 times less risky than Pekin Life. It trades about 0.02 of its potential returns per unit of risk. Pekin Life Insurance is currently generating about 0.01 per unit of risk. If you would invest 10,671 in Arrow Electronics on August 23, 2024 and sell it today you would earn a total of 1,024 from holding Arrow Electronics or generate 9.6% 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. Pekin Life Insurance
Performance |
| Timeline |
| Arrow Electronics |
| Pekin Life Insurance |
Arrow Electronics and Pekin Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arrow Electronics and Pekin Life
The main advantage of trading using opposite Arrow Electronics and Pekin Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arrow Electronics position performs unexpectedly, Pekin Life 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 Pekin Life will offset losses from the drop in Pekin Life's long position.| Arrow Electronics vs. Insight Enterprises | Arrow Electronics vs. Synnex | Arrow Electronics vs. Climb Global Solutions | Arrow Electronics vs. ScanSource |
| Pekin Life vs. Pioneer Floating Rate | Pekin Life vs. The Gabelli Equity | Pekin Life vs. Pioneer Municipal High | Pekin Life vs. Nuveen Global High |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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