Correlation Between Arrow Electronics and MetaVia

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Can any of the company-specific risk be diversified away by investing in both Arrow Electronics and MetaVia 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 MetaVia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arrow Electronics and MetaVia, you can compare the effects of market volatilities on Arrow Electronics and MetaVia 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 MetaVia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arrow Electronics and MetaVia.

Diversification Opportunities for Arrow Electronics and MetaVia

0.73
  Correlation Coefficient

Poor diversification

The 3 months correlation between Arrow and MetaVia is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Electronics and MetaVia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MetaVia 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 MetaVia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MetaVia has no effect on the direction of Arrow Electronics i.e., Arrow Electronics and MetaVia go up and down completely randomly.

Pair Corralation between Arrow Electronics and MetaVia

Considering the 90-day investment horizon Arrow Electronics is expected to generate 4.4 times less return on investment than MetaVia. But when comparing it to its historical volatility, Arrow Electronics is 3.99 times less risky than MetaVia. It trades about 0.0 of its potential returns per unit of risk. MetaVia is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  342.00  in MetaVia on October 9, 2024 and sell it today you would lose (110.00) from holding MetaVia or give up 32.16% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Arrow Electronics  vs.  MetaVia

 Performance 
       Timeline  
Arrow Electronics 

Risk-Adjusted Performance

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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.
MetaVia 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Weak
Over the last 90 days MetaVia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, MetaVia is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Arrow Electronics and MetaVia Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Arrow Electronics and MetaVia

The main advantage of trading using opposite Arrow Electronics and MetaVia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arrow Electronics position performs unexpectedly, MetaVia 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 MetaVia will offset losses from the drop in MetaVia's long position.
The idea behind Arrow Electronics and MetaVia 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.

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