Correlation Between ARROW ELECTRONICS and AENA SME

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

By analyzing existing cross correlation between ARROW ELECTRONICS and AENA SME UNSPADR110, you can compare the effects of market volatilities on ARROW ELECTRONICS and AENA SME 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 AENA SME. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARROW ELECTRONICS and AENA SME.

Diversification Opportunities for ARROW ELECTRONICS and AENA SME

-0.72

Correlation Coefficient

ARROW ELECTRONICS  AENA SME

Pay attention - limited upside

The 3 months correlation between ARROW and AENA is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding ARROW ELECTRONICS and AENA SME UNSPADR110 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AENA SME UNSPADR110 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 AENA SME. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AENA SME UNSPADR110 has no effect on the direction of ARROW ELECTRONICS i.e., ARROW ELECTRONICS and AENA SME go up and down completely randomly.

Pair Corralation between ARROW ELECTRONICS and AENA SME

Assuming the 90 days trading horizon ARROW ELECTRONICS is expected to under-perform the AENA SME. But the stock apears to be less risky and, when comparing its historical volatility, ARROW ELECTRONICS is 1.05 times less risky than AENA SME. The stock trades about -0.09 of its potential returns per unit of risk. The AENA SME UNSPADR110 is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,920  in AENA SME UNSPADR110 on December 29, 2024 and sell it today you would earn a total of  180.00  from holding AENA SME UNSPADR110 or generate 9.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

ARROW ELECTRONICS  vs.  AENA SME UNSPADR110

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. In spite of latest fragile 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.

AENA SME UNSPADR110

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AENA SME UNSPADR110 are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, AENA SME may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with ARROW ELECTRONICS and AENA SME

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

The idea behind ARROW ELECTRONICS and AENA SME UNSPADR110 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.