Correlation Between Canlan Ice and Arrow Electronics
Can any of the company-specific risk be diversified away by investing in both Canlan Ice 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 Canlan Ice and Arrow Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canlan Ice Sports and Arrow Electronics, you can compare the effects of market volatilities on Canlan Ice 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 Canlan Ice with a short position of Arrow Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canlan Ice and Arrow Electronics.
Diversification Opportunities for Canlan Ice and Arrow Electronics
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Canlan and Arrow is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Canlan Ice Sports and Arrow Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Electronics and Canlan Ice 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 Canlan Ice Sports 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 Canlan Ice i.e., Canlan Ice and Arrow Electronics go up and down completely randomly.
Pair Corralation between Canlan Ice and Arrow Electronics
Assuming the 90 days horizon Canlan Ice is expected to generate 2.4 times less return on investment than Arrow Electronics. But when comparing it to its historical volatility, Canlan Ice Sports is 15.56 times less risky than Arrow Electronics. It trades about 0.13 of its potential returns per unit of risk. Arrow Electronics is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 10,868 in Arrow Electronics on September 2, 2024 and sell it today you would earn a total of 1,148 from holding Arrow Electronics or generate 10.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canlan Ice Sports vs. Arrow Electronics
Performance |
| Timeline |
| Canlan Ice Sports |
| Arrow Electronics |
Canlan Ice and Arrow Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canlan Ice and Arrow Electronics
The main advantage of trading using opposite Canlan Ice and Arrow Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canlan Ice 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.| Canlan Ice vs. Kite Realty Group | Canlan Ice vs. Alaska Air Group | Canlan Ice vs. Stepstone Group | Canlan Ice vs. Tencent Music Entertainment |
| Arrow Electronics vs. Avnet Inc | Arrow Electronics vs. Synnex | Arrow Electronics vs. Ingram Micro Holding | Arrow Electronics vs. Insight Enterprises |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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