Correlation Between Arrow Electronics and Turquoise Hill

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

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

Diversification Opportunities for Arrow Electronics and Turquoise Hill

0.14

Correlation Coefficient

Arrow Electronics  Turquoise Hill

Average diversification

The 3 months correlation between Arrow and Turquoise is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Electronics and Turquoise Hill Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Turquoise Hill Resources 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 Turquoise Hill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Turquoise Hill Resources has no effect on the direction of Arrow Electronics i.e., Arrow Electronics and Turquoise Hill go up and down completely randomly.

Pair Corralation between Arrow Electronics and Turquoise Hill

If you would invest  12,338  in Arrow Electronics on September 14, 2024 and sell it today you would lose (308.00) from holding Arrow Electronics or give up 2.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Arrow Electronics  vs.  Turquoise Hill Resources

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.

Turquoise Hill Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Turquoise Hill Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Turquoise Hill is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Arrow Electronics and Turquoise Hill

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

The idea behind Arrow Electronics and Turquoise Hill Resources 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.