Correlation Between Imax Corp and Arrow Electronics

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

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

Diversification Opportunities for Imax Corp and Arrow Electronics

-0.76

Correlation Coefficient

Imax Corp  Arrow Electronics

Pay attention - limited upside

The 3 months correlation between Imax and Arrow is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Imax Corp and Arrow Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Electronics and Imax Corp 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 Imax Corp are associated (or correlated) with Arrow Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrow Electronics has no effect on the direction of Imax Corp i.e., Imax Corp and Arrow Electronics go up and down completely randomly.

Pair Corralation between Imax Corp and Arrow Electronics

Given the investment horizon of 90 days Imax Corp is expected to under-perform the Arrow Electronics. In addition to that, Imax Corp is 1.7 times more volatile than Arrow Electronics. It trades about -0.23 of its total potential returns per unit of risk. Arrow Electronics is currently generating about -0.3 per unit of volatility. If you would invest  12,020  in Arrow Electronics on October 11, 2024 and sell it today you would lose (811.00) from holding Arrow Electronics or give up 6.75% of portfolio value over 90 days.

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

Imax Corp  vs.  Arrow Electronics

Imax Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Imax Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Imax Corp may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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 uncertain 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.

Pair Trading with Imax Corp and Arrow Electronics

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

The idea behind Imax Corp and Arrow Electronics 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.