Correlation Between Bayview Acquisition and Arrow Electronics
Can any of the company-specific risk be diversified away by investing in both Bayview Acquisition and Arrow Electronics 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 Bayview Acquisition and Arrow Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bayview Acquisition Corp and Arrow Electronics, you can compare the effects of market volatilities on Bayview Acquisition and Arrow Electronics 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 Bayview Acquisition with a short position of Arrow Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bayview Acquisition and Arrow Electronics.
Diversification Opportunities for Bayview Acquisition and Arrow Electronics
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Bayview and Arrow is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Bayview Acquisition Corp and Arrow Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Electronics and Bayview Acquisition 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 Bayview Acquisition Corp are associated (or correlated) with Arrow Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrow Electronics has no effect on the direction of Bayview Acquisition i.e., Bayview Acquisition and Arrow Electronics go up and down completely randomly.
Pair Corralation between Bayview Acquisition and Arrow Electronics
Assuming the 90 days horizon Bayview Acquisition Corp is expected to generate 4.99 times more return on investment than Arrow Electronics. However, Bayview Acquisition is 4.99 times more volatile than Arrow Electronics. It trades about -0.02 of its potential returns per unit of risk. Arrow Electronics is currently generating about -0.17 per unit of risk. If you would invest 14.00 in Bayview Acquisition Corp on November 28, 2024 and sell it today you would lose (0.42) from holding Bayview Acquisition Corp or give up 3.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 36.36% |
| Values | Daily Returns |
Bayview Acquisition Corp vs. Arrow Electronics
Performance |
| Timeline |
| Bayview Acquisition Corp |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
| Arrow Electronics |
Bayview Acquisition and Arrow Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bayview Acquisition and Arrow Electronics
The main advantage of trading using opposite Bayview Acquisition and Arrow Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bayview Acquisition position performs unexpectedly, Arrow Electronics 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 Arrow Electronics will offset losses from the drop in Arrow Electronics' long position.| Bayview Acquisition vs. Renesas Electronics | Bayview Acquisition vs. Definitive Healthcare Corp | Bayview Acquisition vs. Integrated Media Technology | Bayview Acquisition vs. Logan Ridge Finance |
| Arrow Electronics vs. Insight Enterprises | Arrow Electronics vs. Synnex | Arrow Electronics vs. Climb Global Solutions | Arrow Electronics vs. ScanSource |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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