Correlation Between Arrow Electronics and SmartStop Self

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

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

Diversification Opportunities for Arrow Electronics and SmartStop Self

-0.77

Correlation Coefficient

Arrow Electronics  SmartStop Self

Pay attention - limited upside

The 3 months correlation between Arrow and SmartStop is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Electronics and SmartStop Self Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SmartStop Self Storage 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 SmartStop Self. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SmartStop Self Storage has no effect on the direction of Arrow Electronics i.e., Arrow Electronics and SmartStop Self go up and down completely randomly.

Pair Corralation between Arrow Electronics and SmartStop Self

Considering the 90-day investment horizon Arrow Electronics is expected to under-perform the SmartStop Self. In addition to that, Arrow Electronics is 4.06 times more volatile than SmartStop Self Storage. It trades about -0.12 of its total potential returns per unit of risk. SmartStop Self Storage is currently generating about 0.18 per unit of volatility. If you would invest  850.00  in SmartStop Self Storage on October 4, 2024 and sell it today you would earn a total of  50.00  from holding SmartStop Self Storage or generate 5.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Arrow Electronics  vs.  SmartStop Self Storage

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.

SmartStop Self Storage

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SmartStop Self Storage are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, SmartStop Self is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Arrow Electronics and SmartStop Self

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

The idea behind Arrow Electronics and SmartStop Self Storage 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 Valuation module to check real value of public entities based on technical and fundamental data.