Correlation Between GE Vernova and Arrow Electronics
Can any of the company-specific risk be diversified away by investing in both GE Vernova 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 GE Vernova and Arrow Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GE Vernova LLC and Arrow Electronics, you can compare the effects of market volatilities on GE Vernova 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 GE Vernova with a short position of Arrow Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of GE Vernova and Arrow Electronics.
Diversification Opportunities for GE Vernova and Arrow Electronics
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GEV and Arrow is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding GE Vernova LLC and Arrow Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Electronics and GE Vernova 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 GE Vernova LLC 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 GE Vernova i.e., GE Vernova and Arrow Electronics go up and down completely randomly.
Pair Corralation between GE Vernova and Arrow Electronics
Considering the 90-day investment horizon GE Vernova LLC is expected to generate 1.21 times more return on investment than Arrow Electronics. However, GE Vernova is 1.21 times more volatile than Arrow Electronics. It trades about 0.36 of its potential returns per unit of risk. Arrow Electronics is currently generating about -0.04 per unit of risk. If you would invest 19,255 in GE Vernova LLC on September 2, 2024 and sell it today you would earn a total of 14,157 from holding GE Vernova LLC or generate 73.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GE Vernova LLC vs. Arrow Electronics
Performance |
| Timeline |
| GE Vernova LLC |
| Arrow Electronics |
GE Vernova and Arrow Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GE Vernova and Arrow Electronics
The main advantage of trading using opposite GE Vernova and Arrow Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GE Vernova 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.| GE Vernova vs. Sonos Inc | GE Vernova vs. JD Sports Fashion | GE Vernova vs. Boston Properties | GE Vernova vs. Mid Atlantic Home Health |
| 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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