Correlation Between Arrow Electronics and ROMERIKE SPAREBANK

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

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

Diversification Opportunities for Arrow Electronics and ROMERIKE SPAREBANK

-0.74

Correlation Coefficient

Arrow Electronics  ROMERIKE SPAREBANK

Pay attention - limited upside

The 3 months correlation between Arrow and ROMERIKE is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Electronics and ROMERIKE SPAREBANK NK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ROMERIKE SPAREBANK and Arrow Electronics 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 Arrow Electronics are associated (or correlated) with ROMERIKE SPAREBANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ROMERIKE SPAREBANK has no effect on the direction of Arrow Electronics i.e., Arrow Electronics and ROMERIKE SPAREBANK go up and down completely randomly.

Pair Corralation between Arrow Electronics and ROMERIKE SPAREBANK

Assuming the 90 days horizon Arrow Electronics is expected to under-perform the ROMERIKE SPAREBANK. In addition to that, Arrow Electronics is 1.65 times more volatile than ROMERIKE SPAREBANK NK. It trades about -0.1 of its total potential returns per unit of risk. ROMERIKE SPAREBANK NK is currently generating about 0.25 per unit of volatility. If you would invest  989.00  in ROMERIKE SPAREBANK NK on December 29, 2024 and sell it today you would earn a total of  154.00  from holding ROMERIKE SPAREBANK NK or generate 15.57% return on investment over 90 days.

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

Arrow Electronics  vs.  ROMERIKE SPAREBANK NK

Arrow Electronics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Arrow Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

ROMERIKE SPAREBANK

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ROMERIKE SPAREBANK NK are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, ROMERIKE SPAREBANK reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Arrow Electronics and ROMERIKE SPAREBANK

The main advantage of trading using opposite Arrow Electronics and ROMERIKE SPAREBANK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arrow Electronics position performs unexpectedly, ROMERIKE SPAREBANK 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 ROMERIKE SPAREBANK will offset losses from the drop in ROMERIKE SPAREBANK's long position.

The idea behind Arrow Electronics and ROMERIKE SPAREBANK NK 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.