Correlation Between ARROW ELECTRONICS and KIMBALL ELECTRONICS

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

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

Diversification Opportunities for ARROW ELECTRONICS and KIMBALL ELECTRONICS

-0.43

Correlation Coefficient

ARROW ELECTRONICS  KIMBALL ELECTRONICS

Very good diversification

The 3 months correlation between ARROW and KIMBALL is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding ARROW ELECTRONICS and KIMBALL ELECTRONICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KIMBALL ELECTRONICS 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 KIMBALL ELECTRONICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KIMBALL ELECTRONICS has no effect on the direction of ARROW ELECTRONICS i.e., ARROW ELECTRONICS and KIMBALL ELECTRONICS go up and down completely randomly.

Pair Corralation between ARROW ELECTRONICS and KIMBALL ELECTRONICS

Assuming the 90 days trading horizon ARROW ELECTRONICS is expected to under-perform the KIMBALL ELECTRONICS. But the stock apears to be less risky and, when comparing its historical volatility, ARROW ELECTRONICS is 1.23 times less risky than KIMBALL ELECTRONICS. The stock trades about -0.03 of its potential returns per unit of risk. The KIMBALL ELECTRONICS is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,650  in KIMBALL ELECTRONICS on September 2, 2024 and sell it today you would earn a total of  160.00  from holding KIMBALL ELECTRONICS or generate 9.7% return on investment over 90 days.

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

ARROW ELECTRONICS  vs.  KIMBALL ELECTRONICS

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. In spite of comparatively stable basic indicators, ARROW ELECTRONICS is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

KIMBALL ELECTRONICS

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in KIMBALL ELECTRONICS are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, KIMBALL ELECTRONICS may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with ARROW ELECTRONICS and KIMBALL ELECTRONICS

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

The idea behind ARROW ELECTRONICS and KIMBALL 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.