Correlation Between Grupo Aeroportuario and Arrow Electronics

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Can any of the company-specific risk be diversified away by investing in both Grupo Aeroportuario 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 Grupo Aeroportuario and Arrow Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grupo Aeroportuario del and Arrow Electronics, you can compare the effects of market volatilities on Grupo Aeroportuario 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 Grupo Aeroportuario with a short position of Arrow Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Aeroportuario and Arrow Electronics.

Diversification Opportunities for Grupo Aeroportuario and Arrow Electronics

-0.46
  Correlation Coefficient

Very good diversification

The 3 months correlation between Grupo and Arrow is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Aeroportuario del and Arrow Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Electronics and Grupo Aeroportuario 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 Grupo Aeroportuario del 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 Grupo Aeroportuario i.e., Grupo Aeroportuario and Arrow Electronics go up and down completely randomly.

Pair Corralation between Grupo Aeroportuario and Arrow Electronics

Assuming the 90 days horizon Grupo Aeroportuario del is expected to generate 1.65 times more return on investment than Arrow Electronics. However, Grupo Aeroportuario is 1.65 times more volatile than Arrow Electronics. It trades about 0.23 of its potential returns per unit of risk. Arrow Electronics is currently generating about 0.16 per unit of risk. If you would invest  17,100  in Grupo Aeroportuario del on October 22, 2024 and sell it today you would earn a total of  1,100  from holding Grupo Aeroportuario del or generate 6.43% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Grupo Aeroportuario del  vs.  Arrow Electronics

 Performance 
       Timeline  
Grupo Aeroportuario del 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Aeroportuario del are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Grupo Aeroportuario reported solid returns over the last few months and may actually be approaching a breakup point.
Arrow Electronics 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Arrow Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Grupo Aeroportuario and Arrow Electronics Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Grupo Aeroportuario and Arrow Electronics

The main advantage of trading using opposite Grupo Aeroportuario and Arrow Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Aeroportuario 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.
The idea behind Grupo Aeroportuario del and Arrow Electronics pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.

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