Correlation Between ARROW ELECTRONICS and GPT

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

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

Diversification Opportunities for ARROW ELECTRONICS and GPT

0.26

Correlation Coefficient

ARROW ELECTRONICS  GPT

Modest diversification

The 3 months correlation between ARROW and GPT is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding ARROW ELECTRONICS and GPT Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GPT Group 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 GPT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GPT Group has no effect on the direction of ARROW ELECTRONICS i.e., ARROW ELECTRONICS and GPT go up and down completely randomly.

Pair Corralation between ARROW ELECTRONICS and GPT

Assuming the 90 days trading horizon ARROW ELECTRONICS is expected to generate 5.78 times less return on investment than GPT. But when comparing it to its historical volatility, ARROW ELECTRONICS is 3.35 times less risky than GPT. It trades about 0.05 of its potential returns per unit of risk. GPT Group is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  254.00  in GPT Group on October 22, 2024 and sell it today you would earn a total of  12.00  from holding GPT Group or generate 4.72% return on investment over 90 days.

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

ARROW ELECTRONICS  vs.  GPT Group

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 latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

GPT Group

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with ARROW ELECTRONICS and GPT

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

The idea behind ARROW ELECTRONICS and GPT Group 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.