Correlation Between Sable Offshore and Arrow Electronics
Can any of the company-specific risk be diversified away by investing in both Sable Offshore 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 Sable Offshore and Arrow Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sable Offshore Corp and Arrow Electronics, you can compare the effects of market volatilities on Sable Offshore 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 Sable Offshore with a short position of Arrow Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sable Offshore and Arrow Electronics.
Diversification Opportunities for Sable Offshore and Arrow Electronics
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sable and Arrow is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Sable Offshore Corp and Arrow Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Electronics and Sable Offshore 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 Sable Offshore Corp 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 Sable Offshore i.e., Sable Offshore and Arrow Electronics go up and down completely randomly.
Pair Corralation between Sable Offshore and Arrow Electronics
Considering the 90-day investment horizon Sable Offshore Corp is expected to generate 1.13 times more return on investment than Arrow Electronics. However, Sable Offshore is 1.13 times more volatile than Arrow Electronics. It trades about 0.21 of its potential returns per unit of risk. Arrow Electronics is currently generating about -0.14 per unit of risk. If you would invest 2,069 in Sable Offshore Corp on August 26, 2024 and sell it today you would earn a total of 339.00 from holding Sable Offshore Corp or generate 16.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sable Offshore Corp vs. Arrow Electronics
Performance |
| Timeline |
| Sable Offshore Corp |
| Arrow Electronics |
Sable Offshore and Arrow Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sable Offshore and Arrow Electronics
The main advantage of trading using opposite Sable Offshore and Arrow Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sable Offshore 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.| Sable Offshore vs. Helmerich and Payne | Sable Offshore vs. Noble plc | Sable Offshore vs. Nabors Industries | Sable Offshore vs. Precision Drilling |
| Arrow Electronics vs. Insight Enterprises | Arrow Electronics vs. Synnex | Arrow Electronics vs. Climb Global Solutions | Arrow Electronics vs. ScanSource |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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