Correlation Between Arrow Electronics and Bitcoin Depot

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

By analyzing existing cross correlation between Arrow Electronics and Bitcoin Depot, you can compare the effects of market volatilities on Arrow Electronics and Bitcoin Depot 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 Bitcoin Depot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arrow Electronics and Bitcoin Depot.

Diversification Opportunities for Arrow Electronics and Bitcoin Depot

-0.68

Correlation Coefficient

Arrow Electronics  Bitcoin Depot

Excellent diversification

The 3 months correlation between Arrow and Bitcoin is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Electronics and Bitcoin Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bitcoin Depot 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 Bitcoin Depot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bitcoin Depot has no effect on the direction of Arrow Electronics i.e., Arrow Electronics and Bitcoin Depot go up and down completely randomly.

Pair Corralation between Arrow Electronics and Bitcoin Depot

Considering the 90-day investment horizon Arrow Electronics is expected to generate 0.28 times more return on investment than Bitcoin Depot. However, Arrow Electronics is 3.61 times less risky than Bitcoin Depot. It trades about -0.18 of its potential returns per unit of risk. Bitcoin Depot is currently generating about -0.2 per unit of risk. If you would invest  12,087  in Arrow Electronics on September 27, 2024 and sell it today you would lose (540.00) from holding Arrow Electronics or give up 4.47% of portfolio value over 90 days.

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

Arrow Electronics  vs.  Bitcoin Depot

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 unsteady performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Bitcoin Depot

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bitcoin Depot are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Bitcoin Depot displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Arrow Electronics and Bitcoin Depot

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

The idea behind Arrow Electronics and Bitcoin Depot 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.