Correlation Between Celestica and Arm Holdings
Can any of the company-specific risk be diversified away by investing in both Celestica and Arm Holdings 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 Celestica and Arm Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Celestica and Arm Holdings plc, you can compare the effects of market volatilities on Celestica and Arm Holdings 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 Celestica with a short position of Arm Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Celestica and Arm Holdings.
Diversification Opportunities for Celestica and Arm Holdings
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Celestica and Arm is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Celestica and Arm Holdings plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arm Holdings plc and Celestica 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 Celestica are associated (or correlated) with Arm Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arm Holdings plc has no effect on the direction of Celestica i.e., Celestica and Arm Holdings go up and down completely randomly.
Pair Corralation between Celestica and Arm Holdings
Considering the 90-day investment horizon Celestica is expected to generate 1.37 times more return on investment than Arm Holdings. However, Celestica is 1.37 times more volatile than Arm Holdings plc. It trades about 0.22 of its potential returns per unit of risk. Arm Holdings plc is currently generating about 0.22 per unit of risk. If you would invest 9,307 in Celestica on November 3, 2024 and sell it today you would earn a total of 3,040 from holding Celestica or generate 32.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Celestica vs. Arm Holdings plc
Performance |
| Timeline |
| Celestica |
| Arm Holdings plc |
Celestica and Arm Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Celestica and Arm Holdings
The main advantage of trading using opposite Celestica and Arm Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Celestica position performs unexpectedly, Arm Holdings 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 Arm Holdings will offset losses from the drop in Arm Holdings' long position.| Celestica vs. Plexus Corp | Celestica vs. Benchmark Electronics | Celestica vs. Flex | Celestica vs. Jabil Circuit |
| Arm Holdings vs. BioNTech SE | Arm Holdings vs. Kuya Silver | Arm Holdings vs. Nicola Mining | Arm Holdings vs. Tarsus Pharmaceuticals |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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