Correlation Between Marine Products and Arrow Electronics
Can any of the company-specific risk be diversified away by investing in both Marine Products 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 Marine Products and Arrow Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Marine Products and Arrow Electronics, you can compare the effects of market volatilities on Marine Products 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 Marine Products with a short position of Arrow Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marine Products and Arrow Electronics.
Diversification Opportunities for Marine Products and Arrow Electronics
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Marine and Arrow is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Marine Products and Arrow Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Electronics and Marine Products 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 Marine Products 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 Marine Products i.e., Marine Products and Arrow Electronics go up and down completely randomly.
Pair Corralation between Marine Products and Arrow Electronics
Considering the 90-day investment horizon Marine Products is expected to generate 0.74 times more return on investment than Arrow Electronics. However, Marine Products is 1.35 times less risky than Arrow Electronics. It trades about 0.1 of its potential returns per unit of risk. Arrow Electronics is currently generating about -0.03 per unit of risk. If you would invest 919.00 in Marine Products on September 4, 2024 and sell it today you would earn a total of 85.00 from holding Marine Products or generate 9.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Marine Products vs. Arrow Electronics
Performance |
| Timeline |
| Marine Products |
| Arrow Electronics |
Marine Products and Arrow Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marine Products and Arrow Electronics
The main advantage of trading using opposite Marine Products and Arrow Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marine Products 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.| Marine Products vs. Thor Industries | Marine Products vs. BRP Inc | Marine Products vs. EZGO Technologies | Marine Products vs. Polaris Industries |
| Arrow Electronics vs. Insight Enterprises | Arrow Electronics vs. ScanSource | Arrow Electronics vs. PC Connection | Arrow Electronics vs. Aquagold International |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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