Correlation Between PC Connection and Arrow Electronics
Can any of the company-specific risk be diversified away by investing in both PC Connection 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 PC Connection and Arrow Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PC Connection and Arrow Electronics, you can compare the effects of market volatilities on PC Connection 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 PC Connection with a short position of Arrow Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of PC Connection and Arrow Electronics.
Diversification Opportunities for PC Connection and Arrow Electronics
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CNXN and Arrow is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding PC Connection and Arrow Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Electronics and PC Connection 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 PC Connection 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 PC Connection i.e., PC Connection and Arrow Electronics go up and down completely randomly.
Pair Corralation between PC Connection and Arrow Electronics
Given the investment horizon of 90 days PC Connection is expected to generate 1.07 times more return on investment than Arrow Electronics. However, PC Connection is 1.07 times more volatile than Arrow Electronics. It trades about 0.04 of its potential returns per unit of risk. Arrow Electronics is currently generating about -0.04 per unit of risk. If you would invest 6,720 in PC Connection on August 24, 2024 and sell it today you would earn a total of 453.00 from holding PC Connection or generate 6.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PC Connection vs. Arrow Electronics
Performance |
| Timeline |
| PC Connection |
| Arrow Electronics |
PC Connection and Arrow Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PC Connection and Arrow Electronics
The main advantage of trading using opposite PC Connection and Arrow Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PC Connection 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.| PC Connection vs. ScanSource | PC Connection vs. Insight Enterprises | PC Connection vs. Avnet Inc | PC Connection vs. Synnex |
| 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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