Correlation Between Avnet and Synnex
Can any of the company-specific risk be diversified away by investing in both Avnet and Synnex 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 Avnet and Synnex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avnet Inc and Synnex, you can compare the effects of market volatilities on Avnet and Synnex 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 Avnet with a short position of Synnex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avnet and Synnex.
Diversification Opportunities for Avnet and Synnex
Good diversification
The 3 months correlation between Avnet and Synnex is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Avnet Inc and Synnex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synnex and Avnet 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 Avnet Inc are associated (or correlated) with Synnex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Synnex has no effect on the direction of Avnet i.e., Avnet and Synnex go up and down completely randomly.
Pair Corralation between Avnet and Synnex
Considering the 90-day investment horizon Avnet Inc is expected to under-perform the Synnex. But the stock apears to be less risky and, when comparing its historical volatility, Avnet Inc is 1.8 times less risky than Synnex. The stock trades about -0.01 of its potential returns per unit of risk. The Synnex is currently generating about 0.43 of returns per unit of risk over similar time horizon. If you would invest 11,612 in Synnex on November 2, 2024 and sell it today you would earn a total of 2,518 from holding Synnex or generate 21.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avnet Inc vs. Synnex
Performance |
| Timeline |
| Avnet Inc |
| Synnex |
Avnet and Synnex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avnet and Synnex
The main advantage of trading using opposite Avnet and Synnex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avnet position performs unexpectedly, Synnex 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 Synnex will offset losses from the drop in Synnex's long position.The idea behind Avnet Inc and Synnex pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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