Correlation Between Snap On and Arrow Electronics
Can any of the company-specific risk be diversified away by investing in both Snap On 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 Snap On and Arrow Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap On and Arrow Electronics, you can compare the effects of market volatilities on Snap On 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 Snap On with a short position of Arrow Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap On and Arrow Electronics.
Diversification Opportunities for Snap On and Arrow Electronics
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Snap and Arrow is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Snap On and Arrow Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Electronics and Snap On 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 Snap On 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 Snap On i.e., Snap On and Arrow Electronics go up and down completely randomly.
Pair Corralation between Snap On and Arrow Electronics
Considering the 90-day investment horizon Snap On is expected to under-perform the Arrow Electronics. But the stock apears to be less risky and, when comparing its historical volatility, Snap On is 1.92 times less risky than Arrow Electronics. The stock trades about -0.06 of its potential returns per unit of risk. The Arrow Electronics is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 12,003 in Arrow Electronics on September 12, 2024 and sell it today you would earn a total of 17.00 from holding Arrow Electronics or generate 0.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Snap On vs. Arrow Electronics
Performance |
| Timeline |
| Snap On |
| Arrow Electronics |
Snap On and Arrow Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap On and Arrow Electronics
The main advantage of trading using opposite Snap On and Arrow Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap On 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.| Snap On vs. Lincoln Electric Holdings | Snap On vs. Timken Company | Snap On vs. Kennametal | Snap On vs. Toro Co |
| Arrow Electronics vs. Insight Enterprises | Arrow Electronics vs. Synnex | Arrow Electronics vs. Climb Global Solutions | Arrow Electronics vs. PC Connection |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
Other Complementary Tools
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |