Correlation Between FC Investment and Arrow Electronics
Can any of the company-specific risk be diversified away by investing in both FC Investment 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 FC Investment and Arrow Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FC Investment Trust and Arrow Electronics, you can compare the effects of market volatilities on FC Investment 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 FC Investment with a short position of Arrow Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of FC Investment and Arrow Electronics.
Diversification Opportunities for FC Investment and Arrow Electronics
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between FCIT and Arrow is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding FC Investment Trust and Arrow Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Electronics and FC Investment 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 FC Investment Trust 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 FC Investment i.e., FC Investment and Arrow Electronics go up and down completely randomly.
Pair Corralation between FC Investment and Arrow Electronics
Assuming the 90 days trading horizon FC Investment Trust is expected to generate 0.44 times more return on investment than Arrow Electronics. However, FC Investment Trust is 2.27 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 per unit of risk. If you would invest 98,702 in FC Investment Trust on September 2, 2024 and sell it today you would earn a total of 13,498 from holding FC Investment Trust or generate 13.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.23% |
| Values | Daily Returns |
FC Investment Trust vs. Arrow Electronics
Performance |
| Timeline |
| FC Investment Trust |
| Arrow Electronics |
FC Investment and Arrow Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FC Investment and Arrow Electronics
The main advantage of trading using opposite FC Investment and Arrow Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FC Investment 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.| FC Investment vs. Toyota Motor Corp | FC Investment vs. SoftBank Group Corp | FC Investment vs. OTP Bank Nyrt | FC Investment vs. Las Vegas Sands |
| Arrow Electronics vs. Uniper SE | Arrow Electronics vs. Mulberry Group PLC | Arrow Electronics vs. London Security Plc | Arrow Electronics vs. Triad Group PLC |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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