Correlation Between ALLIANZ TECHNOTRLS and Arrow Electronics

Can any of the company-specific risk be diversified away by investing in both ALLIANZ TECHNOTRLS 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 ALLIANZ TECHNOTRLS and Arrow Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ALLIANZ TECHNOTRLS 025 and Arrow Electronics, you can compare the effects of market volatilities on ALLIANZ TECHNOTRLS 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 ALLIANZ TECHNOTRLS with a short position of Arrow Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALLIANZ TECHNOTRLS and Arrow Electronics.

Diversification Opportunities for ALLIANZ TECHNOTRLS and Arrow Electronics

-0.45

Correlation Coefficient

ALLIANZ TECHNOTRLS  Arrow Electronics

Very good diversification

The 3 months correlation between ALLIANZ and Arrow is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding ALLIANZ TECHNOTRLS 025 and Arrow Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Electronics and ALLIANZ TECHNOTRLS 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 ALLIANZ TECHNOTRLS 025 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 ALLIANZ TECHNOTRLS i.e., ALLIANZ TECHNOTRLS and Arrow Electronics go up and down completely randomly.

Pair Corralation between ALLIANZ TECHNOTRLS and Arrow Electronics

Assuming the 90 days horizon ALLIANZ TECHNOTRLS 025 is expected to generate 0.74 times more return on investment than Arrow Electronics. However, ALLIANZ TECHNOTRLS 025 is 1.36 times less risky than Arrow Electronics. It trades about 0.32 of its potential returns per unit of risk. Arrow Electronics is currently generating about 0.13 per unit of risk. If you would invest  466.00  in ALLIANZ TECHNOTRLS 025 on September 21, 2024 and sell it today you would earn a total of  44.00  from holding ALLIANZ TECHNOTRLS 025 or generate 9.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.65%
Values	Daily Returns

ALLIANZ TECHNOTRLS 025  vs.  Arrow Electronics

ALLIANZ TECHNOTRLS 025

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ALLIANZ TECHNOTRLS 025 are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, ALLIANZ TECHNOTRLS reported solid returns over the last few months and may actually be approaching a breakup point.

Arrow Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arrow Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Arrow Electronics is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ALLIANZ TECHNOTRLS and Arrow Electronics

The main advantage of trading using opposite ALLIANZ TECHNOTRLS and Arrow Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALLIANZ TECHNOTRLS 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.

The idea behind ALLIANZ TECHNOTRLS 025 and Arrow Electronics 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.