Correlation Between Arrow Electronics and Spyre Therapeutics

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

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

Diversification Opportunities for Arrow Electronics and Spyre Therapeutics

0.05

Correlation Coefficient

Arrow Electronics  Spyre Therapeutics

Significant diversification

The 3 months correlation between Arrow and Spyre is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Electronics and Spyre Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spyre Therapeutics 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 Spyre Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spyre Therapeutics has no effect on the direction of Arrow Electronics i.e., Arrow Electronics and Spyre Therapeutics go up and down completely randomly.

Pair Corralation between Arrow Electronics and Spyre Therapeutics

Considering the 90-day investment horizon Arrow Electronics is expected to generate 0.57 times more return on investment than Spyre Therapeutics. However, Arrow Electronics is 1.74 times less risky than Spyre Therapeutics. It trades about 0.01 of its potential returns per unit of risk. Spyre Therapeutics is currently generating about -0.01 per unit of risk. If you would invest  12,286  in Arrow Electronics on September 12, 2024 and sell it today you would earn a total of  20.00  from holding Arrow Electronics or generate 0.16% return on investment over 90 days.

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

Arrow Electronics  vs.  Spyre Therapeutics

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 fairly stable basic indicators, Arrow Electronics is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Spyre Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Spyre Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Spyre Therapeutics is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Arrow Electronics and Spyre Therapeutics

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

The idea behind Arrow Electronics and Spyre Therapeutics 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.