Correlation Between Salzgitter and ARROW ELECTRONICS
Can any of the company-specific risk be diversified away by investing in both Salzgitter 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 Salzgitter and ARROW ELECTRONICS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salzgitter AG and ARROW ELECTRONICS, you can compare the effects of market volatilities on Salzgitter 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 Salzgitter with a short position of ARROW ELECTRONICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salzgitter and ARROW ELECTRONICS.
Diversification Opportunities for Salzgitter and ARROW ELECTRONICS
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Salzgitter and ARROW is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Salzgitter AG and ARROW ELECTRONICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARROW ELECTRONICS and Salzgitter 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 Salzgitter AG 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 Salzgitter i.e., Salzgitter and ARROW ELECTRONICS go up and down completely randomly.
Pair Corralation between Salzgitter and ARROW ELECTRONICS
Assuming the 90 days trading horizon Salzgitter AG is expected to under-perform the ARROW ELECTRONICS. But the stock apears to be less risky and, when comparing its historical volatility, Salzgitter AG is 5.27 times less risky than ARROW ELECTRONICS. The stock trades about -0.02 of its potential returns per unit of risk. The ARROW ELECTRONICS is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 11,900 in ARROW ELECTRONICS on September 5, 2024 and sell it today you would lose (400.00) from holding ARROW ELECTRONICS or give up 3.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.22% |
| Values | Daily Returns |
Salzgitter AG vs. ARROW ELECTRONICS
Performance |
| Timeline |
| Salzgitter AG |
| ARROW ELECTRONICS |
Salzgitter and ARROW ELECTRONICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salzgitter and ARROW ELECTRONICS
The main advantage of trading using opposite Salzgitter and ARROW ELECTRONICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salzgitter 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.| Salzgitter vs. ARROW ELECTRONICS | Salzgitter vs. DIVERSIFIED ROYALTY | Salzgitter vs. KIMBALL ELECTRONICS | Salzgitter vs. Richardson Electronics |
| ARROW ELECTRONICS vs. TOTAL GABON | ARROW ELECTRONICS vs. Walgreens Boots Alliance | ARROW ELECTRONICS vs. Peak Resources Limited |
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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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