Correlation Between Skandinaviska Enskilda and ARROW ELECTRONICS
Can any of the company-specific risk be diversified away by investing in both Skandinaviska Enskilda 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 Skandinaviska Enskilda and ARROW ELECTRONICS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Skandinaviska Enskilda Banken and ARROW ELECTRONICS, you can compare the effects of market volatilities on Skandinaviska Enskilda 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 Skandinaviska Enskilda with a short position of ARROW ELECTRONICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Skandinaviska Enskilda and ARROW ELECTRONICS.
Diversification Opportunities for Skandinaviska Enskilda and ARROW ELECTRONICS
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Skandinaviska and ARROW is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Skandinaviska Enskilda Banken and ARROW ELECTRONICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARROW ELECTRONICS and Skandinaviska Enskilda 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 Skandinaviska Enskilda Banken 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 Skandinaviska Enskilda i.e., Skandinaviska Enskilda and ARROW ELECTRONICS go up and down completely randomly.
Pair Corralation between Skandinaviska Enskilda and ARROW ELECTRONICS
Assuming the 90 days trading horizon Skandinaviska Enskilda is expected to generate 6.51 times less return on investment than ARROW ELECTRONICS. But when comparing it to its historical volatility, Skandinaviska Enskilda Banken is 8.31 times less risky than ARROW ELECTRONICS. It trades about 0.06 of its potential returns per unit of risk. ARROW ELECTRONICS is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 10,300 in ARROW ELECTRONICS on August 29, 2024 and sell it today you would earn a total of 1,100 from holding ARROW ELECTRONICS or generate 10.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Skandinaviska Enskilda Banken vs. ARROW ELECTRONICS
Performance |
| Timeline |
| Skandinaviska Enskilda |
| ARROW ELECTRONICS |
Skandinaviska Enskilda and ARROW ELECTRONICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Skandinaviska Enskilda and ARROW ELECTRONICS
The main advantage of trading using opposite Skandinaviska Enskilda and ARROW ELECTRONICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Skandinaviska Enskilda 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's long position.| Skandinaviska Enskilda vs. Goosehead Insurance | Skandinaviska Enskilda vs. Japan Post Insurance | Skandinaviska Enskilda vs. Methode Electronics | Skandinaviska Enskilda vs. ELECTRONIC ARTS |
| ARROW ELECTRONICS vs. Apple Inc | ARROW ELECTRONICS vs. Apple Inc | ARROW ELECTRONICS vs. Superior Plus Corp | ARROW ELECTRONICS vs. SIVERS SEMICONDUCTORS AB |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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