Correlation Between Arrow Electronics and Solarmax Technology
Can any of the company-specific risk be diversified away by investing in both Arrow Electronics and Solarmax Technology 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 Solarmax Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arrow Electronics and Solarmax Technology Common, you can compare the effects of market volatilities on Arrow Electronics and Solarmax Technology 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 Solarmax Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arrow Electronics and Solarmax Technology.
Diversification Opportunities for Arrow Electronics and Solarmax Technology
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Arrow and Solarmax is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Electronics and Solarmax Technology Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solarmax Technology 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 Solarmax Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solarmax Technology has no effect on the direction of Arrow Electronics i.e., Arrow Electronics and Solarmax Technology go up and down completely randomly.
Pair Corralation between Arrow Electronics and Solarmax Technology
Considering the 90-day investment horizon Arrow Electronics is expected to generate 1.21 times less return on investment than Solarmax Technology. But when comparing it to its historical volatility, Arrow Electronics is 6.17 times less risky than Solarmax Technology. It trades about 0.22 of its potential returns per unit of risk. Solarmax Technology Common is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 174.00 in Solarmax Technology Common on November 2, 2024 and sell it today you would earn a total of 2.00 from holding Solarmax Technology Common or generate 1.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arrow Electronics vs. Solarmax Technology Common
Performance |
| Timeline |
| Arrow Electronics |
| Solarmax Technology |
Arrow Electronics and Solarmax Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arrow Electronics and Solarmax Technology
The main advantage of trading using opposite Arrow Electronics and Solarmax Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arrow Electronics position performs unexpectedly, Solarmax Technology 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 Solarmax Technology will offset losses from the drop in Solarmax Technology's long position.| Arrow Electronics vs. Insight Enterprises | Arrow Electronics vs. Synnex | Arrow Electronics vs. Climb Global Solutions | Arrow Electronics vs. ScanSource |
| Solarmax Technology vs. Atmus Filtration Technologies | Solarmax Technology vs. Tesla Inc | Solarmax Technology vs. BorgWarner | Solarmax Technology vs. BRP Inc |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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