Correlation Between Syntec Optics and Arrow Electronics

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

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

Diversification Opportunities for Syntec Optics and Arrow Electronics

-0.32

Correlation Coefficient

Syntec Optics  Arrow Electronics

Very good diversification

The 3 months correlation between Syntec and Arrow is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Syntec Optics Holdings and Arrow Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Electronics and Syntec Optics 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 Syntec Optics Holdings 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 Syntec Optics i.e., Syntec Optics and Arrow Electronics go up and down completely randomly.

Pair Corralation between Syntec Optics and Arrow Electronics

Given the investment horizon of 90 days Syntec Optics Holdings is expected to generate 6.51 times more return on investment than Arrow Electronics. However, Syntec Optics is 6.51 times more volatile than Arrow Electronics. It trades about 0.02 of its potential returns per unit of risk. Arrow Electronics is currently generating about 0.01 per unit of risk. If you would invest  1,008  in Syntec Optics Holdings on October 4, 2024 and sell it today you would lose (740.00) from holding Syntec Optics Holdings or give up 73.41% of portfolio value over 90 days.

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

Syntec Optics Holdings  vs.  Arrow Electronics

Syntec Optics Holdings

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Syntec Optics Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Syntec Optics showed solid returns over the last few months and may actually be approaching a breakup point.

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 unsteady 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 Syntec Optics and Arrow Electronics

The main advantage of trading using opposite Syntec Optics and Arrow Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Syntec Optics 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 Syntec Optics Holdings 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..