Correlation Between Arrow Electronics and Dayforce

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

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

Diversification Opportunities for Arrow Electronics and Dayforce

-0.76

Correlation Coefficient

Arrow Electronics  Dayforce

Pay attention - limited upside

The 3 months correlation between Arrow and Dayforce is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Electronics and Dayforce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dayforce 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 Dayforce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dayforce has no effect on the direction of Arrow Electronics i.e., Arrow Electronics and Dayforce go up and down completely randomly.

Pair Corralation between Arrow Electronics and Dayforce

Considering the 90-day investment horizon Arrow Electronics is expected to generate 0.68 times more return on investment than Dayforce. However, Arrow Electronics is 1.47 times less risky than Dayforce. It trades about -0.34 of its potential returns per unit of risk. Dayforce is currently generating about -0.36 per unit of risk. If you would invest  12,057  in Arrow Electronics on October 5, 2024 and sell it today you would lose (919.00) from holding Arrow Electronics or give up 7.62% 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.  Dayforce

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

Dayforce

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dayforce are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Dayforce showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Arrow Electronics and Dayforce

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

The idea behind Arrow Electronics and Dayforce 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.