Correlation Between Amazon and Arrow Electronics,

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

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

Diversification Opportunities for Amazon and Arrow Electronics,

-0.51

Correlation Coefficient

Amazon  Arrow Electronics,

Excellent diversification

The 3 months correlation between Amazon and Arrow is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Arrow Electronics, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Electronics, and Amazon 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 Amazon Inc 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 Amazon i.e., Amazon and Arrow Electronics, go up and down completely randomly.

Pair Corralation between Amazon and Arrow Electronics,

Assuming the 90 days trading horizon Amazon Inc is expected to generate 1.36 times more return on investment than Arrow Electronics,. However, Amazon is 1.36 times more volatile than Arrow Electronics,. It trades about 0.36 of its potential returns per unit of risk. Arrow Electronics, is currently generating about 0.07 per unit of risk. If you would invest  5,230  in Amazon Inc on September 13, 2024 and sell it today you would earn a total of  1,631  from holding Amazon Inc or generate 31.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	90.48%
Values	Daily Returns

Amazon Inc  vs.  Arrow Electronics,

Amazon Inc

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Amazon Inc are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Amazon sustained solid returns over the last few months and may actually be approaching a breakup point.

Arrow Electronics,

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Arrow Electronics, are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Arrow Electronics, is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Amazon and Arrow Electronics,

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

The idea behind Amazon Inc 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.