Correlation Between Global Net and Arrow Electronics
Can any of the company-specific risk be diversified away by investing in both Global Net 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 Global Net and Arrow Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Net Lease and Arrow Electronics, you can compare the effects of market volatilities on Global Net 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 Global Net with a short position of Arrow Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Net and Arrow Electronics.
Diversification Opportunities for Global Net and Arrow Electronics
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Global and Arrow is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Global Net Lease and Arrow Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Electronics and Global Net 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 Global Net Lease 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 Global Net i.e., Global Net and Arrow Electronics go up and down completely randomly.
Pair Corralation between Global Net and Arrow Electronics
Assuming the 90 days trading horizon Global Net Lease is expected to generate 3.69 times more return on investment than Arrow Electronics. However, Global Net is 3.69 times more volatile than Arrow Electronics. It trades about 0.01 of its potential returns per unit of risk. Arrow Electronics is currently generating about -0.01 per unit of risk. If you would invest 1,116 in Global Net Lease on October 25, 2024 and sell it today you would lose (398.00) from holding Global Net Lease or give up 35.66% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 98.98% |
Values | Daily Returns |
Global Net Lease vs. Arrow Electronics
Performance |
Timeline |
Global Net Lease |
Arrow Electronics |
Global Net and Arrow Electronics Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Global Net and Arrow Electronics
The main advantage of trading using opposite Global Net and Arrow Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Net 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.Global Net vs. Medical Properties Trust | Global Net vs. Catena Media PLC | Global Net vs. XLMedia PLC | Global Net vs. Hollywood Bowl Group |
Arrow Electronics vs. Target Healthcare REIT | Arrow Electronics vs. Universal Health Services | Arrow Electronics vs. Abingdon Health Plc | Arrow Electronics vs. Bellevue Healthcare Trust |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
Other Complementary Tools
Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
Share Portfolio Track or share privately all of your investments from the convenience of any device | |
Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins |