Correlation Between Arrow Electronics and Cimpress

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

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

Diversification Opportunities for Arrow Electronics and Cimpress

0.89

Correlation Coefficient

Arrow Electronics  Cimpress

Very poor diversification

The 3 months correlation between Arrow and Cimpress is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Electronics and Cimpress NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cimpress NV 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 Cimpress. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cimpress NV has no effect on the direction of Arrow Electronics i.e., Arrow Electronics and Cimpress go up and down completely randomly.

Pair Corralation between Arrow Electronics and Cimpress

Considering the 90-day investment horizon Arrow Electronics is expected to generate 0.52 times more return on investment than Cimpress. However, Arrow Electronics is 1.94 times less risky than Cimpress. It trades about -0.08 of its potential returns per unit of risk. Cimpress NV is currently generating about -0.28 per unit of risk. If you would invest  11,542  in Arrow Electronics on December 19, 2024 and sell it today you would lose (799.00) from holding Arrow Electronics or give up 6.92% of portfolio value over 90 days.

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

Arrow Electronics  vs.  Cimpress NV

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 uncertain performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Cimpress NV

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cimpress NV has generated negative risk-adjusted returns adding no value to investors with long positions. Even with abnormal performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Arrow Electronics and Cimpress

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

The idea behind Arrow Electronics and Cimpress NV 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.