Correlation Between Gen Digital and Arbe Robotics

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

By analyzing existing cross correlation between Gen Digital and Arbe Robotics, you can compare the effects of market volatilities on Gen Digital and Arbe Robotics 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 Gen Digital with a short position of Arbe Robotics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gen Digital and Arbe Robotics.

Diversification Opportunities for Gen Digital and Arbe Robotics

-0.21

Correlation Coefficient

Gen Digital  Arbe Robotics

Very good diversification

The 3 months correlation between Gen and Arbe is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Gen Digital and Arbe Robotics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arbe Robotics and Gen Digital 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 Gen Digital are associated (or correlated) with Arbe Robotics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arbe Robotics has no effect on the direction of Gen Digital i.e., Gen Digital and Arbe Robotics go up and down completely randomly.

Pair Corralation between Gen Digital and Arbe Robotics

Considering the 90-day investment horizon Gen Digital is expected to generate 0.12 times more return on investment than Arbe Robotics. However, Gen Digital is 8.65 times less risky than Arbe Robotics. It trades about 0.0 of its potential returns per unit of risk. Arbe Robotics is currently generating about -0.01 per unit of risk. If you would invest  2,774  in Gen Digital on December 26, 2024 and sell it today you would lose (8.00) from holding Gen Digital or give up 0.29% of portfolio value over 90 days.

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

Gen Digital  vs.  Arbe Robotics

Gen Digital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gen Digital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Gen Digital is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Arbe Robotics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Arbe Robotics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental drivers remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Gen Digital and Arbe Robotics

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

The idea behind Gen Digital and Arbe Robotics 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.