Correlation Between ARROW ELECTRONICS and SEALED AIR

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

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

Diversification Opportunities for ARROW ELECTRONICS and SEALED AIR

0.04

Correlation Coefficient

ARROW ELECTRONICS  SEALED AIR

Significant diversification

The 3 months correlation between ARROW and SEALED is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding ARROW ELECTRONICS and SEALED AIR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEALED AIR 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 SEALED AIR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEALED AIR has no effect on the direction of ARROW ELECTRONICS i.e., ARROW ELECTRONICS and SEALED AIR go up and down completely randomly.

Pair Corralation between ARROW ELECTRONICS and SEALED AIR

Assuming the 90 days trading horizon ARROW ELECTRONICS is expected to under-perform the SEALED AIR. In addition to that, ARROW ELECTRONICS is 1.52 times more volatile than SEALED AIR . It trades about -0.05 of its total potential returns per unit of risk. SEALED AIR is currently generating about 0.02 per unit of volatility. If you would invest  3,281  in SEALED AIR on October 23, 2024 and sell it today you would earn a total of  39.00  from holding SEALED AIR or generate 1.19% return on investment over 90 days.

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

ARROW ELECTRONICS  vs.  SEALED AIR

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 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.

SEALED AIR

Risk-Adjusted Performance

1 of 100

Weak

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

Pair Trading with ARROW ELECTRONICS and SEALED AIR

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

The idea behind ARROW ELECTRONICS and SEALED AIR 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.