Correlation Between Avnet and Cogobuy
Can any of the company-specific risk be diversified away by investing in both Avnet and Cogobuy 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 Avnet and Cogobuy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avnet Inc and Cogobuy Group, you can compare the effects of market volatilities on Avnet and Cogobuy 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 Avnet with a short position of Cogobuy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avnet and Cogobuy.
Diversification Opportunities for Avnet and Cogobuy
Poor diversification
The 3 months correlation between Avnet and Cogobuy is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Avnet Inc and Cogobuy Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogobuy Group and Avnet 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 Avnet Inc are associated (or correlated) with Cogobuy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cogobuy Group has no effect on the direction of Avnet i.e., Avnet and Cogobuy go up and down completely randomly.
Pair Corralation between Avnet and Cogobuy
Assuming the 90 days horizon Avnet Inc is expected to generate 0.42 times more return on investment than Cogobuy. However, Avnet Inc is 2.37 times less risky than Cogobuy. It trades about 0.08 of its potential returns per unit of risk. Cogobuy Group is currently generating about -0.12 per unit of risk. If you would invest 4,960 in Avnet Inc on September 2, 2024 and sell it today you would earn a total of 140.00 from holding Avnet Inc or generate 2.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avnet Inc vs. Cogobuy Group
Performance |
| Timeline |
| Avnet Inc |
| Cogobuy Group |
Avnet and Cogobuy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avnet and Cogobuy
The main advantage of trading using opposite Avnet and Cogobuy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avnet position performs unexpectedly, Cogobuy 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 Cogobuy will offset losses from the drop in Cogobuy's long position.The idea behind Avnet Inc and Cogobuy Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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