Correlation Between Apple and ARROW ELECTRONICS

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

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

Diversification Opportunities for Apple and ARROW ELECTRONICS

-0.07

Correlation Coefficient

Apple  ARROW ELECTRONICS

Good diversification

The 3 months correlation between Apple and ARROW is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and ARROW ELECTRONICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARROW ELECTRONICS and Apple 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 Apple 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 Apple i.e., Apple and ARROW ELECTRONICS go up and down completely randomly.

Pair Corralation between Apple and ARROW ELECTRONICS

Assuming the 90 days trading horizon Apple is expected to generate 5.83 times less return on investment than ARROW ELECTRONICS. But when comparing it to its historical volatility, Apple Inc is 10.98 times less risky than ARROW ELECTRONICS. It trades about 0.08 of its potential returns per unit of risk. ARROW ELECTRONICS is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  11,300  in ARROW ELECTRONICS on September 12, 2024 and sell it today you would earn a total of  0.00  from holding ARROW ELECTRONICS or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Apple Inc  vs.  ARROW ELECTRONICS

Apple Inc

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Apple unveiled solid returns over the last few months and may actually be approaching a breakup point.

ARROW ELECTRONICS

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ARROW ELECTRONICS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, ARROW ELECTRONICS is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Apple and ARROW ELECTRONICS

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

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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.