Correlation Between Big Tree and Arrow Electronics
Can any of the company-specific risk be diversified away by investing in both Big Tree 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 Big Tree and Arrow Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Big Tree Cloud and Arrow Electronics, you can compare the effects of market volatilities on Big Tree 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 Big Tree with a short position of Arrow Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Big Tree and Arrow Electronics.
Diversification Opportunities for Big Tree and Arrow Electronics
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Big and Arrow is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Big Tree Cloud and Arrow Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Electronics and Big Tree 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 Big Tree Cloud 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 Big Tree i.e., Big Tree and Arrow Electronics go up and down completely randomly.
Pair Corralation between Big Tree and Arrow Electronics
Considering the 90-day investment horizon Big Tree Cloud is expected to generate 6.84 times more return on investment than Arrow Electronics. However, Big Tree is 6.84 times more volatile than Arrow Electronics. It trades about -0.01 of its potential returns per unit of risk. Arrow Electronics is currently generating about -0.06 per unit of risk. If you would invest 446.00 in Big Tree Cloud on August 28, 2024 and sell it today you would lose (215.00) from holding Big Tree Cloud or give up 48.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Big Tree Cloud vs. Arrow Electronics
Performance |
| Timeline |
| Big Tree Cloud |
| Arrow Electronics |
Big Tree and Arrow Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Big Tree and Arrow Electronics
The main advantage of trading using opposite Big Tree and Arrow Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Big Tree 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.| Big Tree vs. Western Copper and | Big Tree vs. PennantPark Floating Rate | Big Tree vs. Nomura Holdings ADR | Big Tree vs. Avient Corp |
| 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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