Correlation Between Arrow Electronics and Buckeye

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

By analyzing existing cross correlation between Arrow Electronics and Buckeye Partners 675, you can compare the effects of market volatilities on Arrow Electronics and Buckeye 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 Buckeye. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arrow Electronics and Buckeye.

Diversification Opportunities for Arrow Electronics and Buckeye

-0.62

Correlation Coefficient

Arrow Electronics  Buckeye

Excellent diversification

The 3 months correlation between Arrow and Buckeye is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Electronics and Buckeye Partners 675 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Buckeye Partners 675 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 Buckeye. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Buckeye Partners 675 has no effect on the direction of Arrow Electronics i.e., Arrow Electronics and Buckeye go up and down completely randomly.

Pair Corralation between Arrow Electronics and Buckeye

Considering the 90-day investment horizon Arrow Electronics is expected to generate 0.53 times more return on investment than Buckeye. However, Arrow Electronics is 1.89 times less risky than Buckeye. It trades about -0.05 of its potential returns per unit of risk. Buckeye Partners 675 is currently generating about -0.22 per unit of risk. If you would invest  12,961  in Arrow Electronics on September 17, 2024 and sell it today you would lose (1,032) from holding Arrow Electronics or give up 7.96% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	24.62%
Values	Daily Returns

Arrow Electronics  vs.  Buckeye Partners 675

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 latest uncertain performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Buckeye Partners 675

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Buckeye Partners 675 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for Buckeye Partners 675 investors.

Pair Trading with Arrow Electronics and Buckeye

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

The idea behind Arrow Electronics and Buckeye Partners 675 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.