Correlation Between Arrow Electronics and Electrovaya Common

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

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

Diversification Opportunities for Arrow Electronics and Electrovaya Common

-0.23

Correlation Coefficient

Arrow Electronics  Electrovaya Common

Very good diversification

The 3 months correlation between Arrow and Electrovaya is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Electronics and Electrovaya Common Shares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electrovaya Common Shares 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 Electrovaya Common. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electrovaya Common Shares has no effect on the direction of Arrow Electronics i.e., Arrow Electronics and Electrovaya Common go up and down completely randomly.

Pair Corralation between Arrow Electronics and Electrovaya Common

Considering the 90-day investment horizon Arrow Electronics is expected to under-perform the Electrovaya Common. But the stock apears to be less risky and, when comparing its historical volatility, Arrow Electronics is 2.23 times less risky than Electrovaya Common. The stock trades about -0.12 of its potential returns per unit of risk. The Electrovaya Common Shares is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  230.00  in Electrovaya Common Shares on October 4, 2024 and sell it today you would earn a total of  25.00  from holding Electrovaya Common Shares or generate 10.87% return on investment over 90 days.

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

Arrow Electronics  vs.  Electrovaya Common Shares

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 February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Electrovaya Common Shares

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Electrovaya Common Shares are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, Electrovaya Common sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Arrow Electronics and Electrovaya Common

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

The idea behind Arrow Electronics and Electrovaya Common Shares 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.