Correlation Between KIMBALL ELECTRONICS and ARROW ELECTRONICS

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

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

Diversification Opportunities for KIMBALL ELECTRONICS and ARROW ELECTRONICS

-0.56

Correlation Coefficient

KIMBALL ELECTRONICS  ARROW ELECTRONICS

Excellent diversification

The 3 months correlation between KIMBALL and ARROW is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding KIMBALL ELECTRONICS and ARROW ELECTRONICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARROW ELECTRONICS and KIMBALL 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 KIMBALL ELECTRONICS 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 KIMBALL ELECTRONICS i.e., KIMBALL ELECTRONICS and ARROW ELECTRONICS go up and down completely randomly.

Pair Corralation between KIMBALL ELECTRONICS and ARROW ELECTRONICS

Assuming the 90 days horizon KIMBALL ELECTRONICS is expected to under-perform the ARROW ELECTRONICS. In addition to that, KIMBALL ELECTRONICS is 1.41 times more volatile than ARROW ELECTRONICS. It trades about -0.18 of its total potential returns per unit of risk. ARROW ELECTRONICS is currently generating about -0.13 per unit of volatility. If you would invest  11,400  in ARROW ELECTRONICS on September 23, 2024 and sell it today you would lose (400.00) from holding ARROW ELECTRONICS or give up 3.51% of portfolio value over 90 days.

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

KIMBALL ELECTRONICS  vs.  ARROW ELECTRONICS

KIMBALL ELECTRONICS

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in KIMBALL ELECTRONICS are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, KIMBALL ELECTRONICS may actually be approaching a critical reversion point that can send shares even higher in January 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 comparatively stable basic indicators, ARROW ELECTRONICS is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with KIMBALL ELECTRONICS and ARROW ELECTRONICS

The main advantage of trading using opposite KIMBALL ELECTRONICS and ARROW ELECTRONICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KIMBALL ELECTRONICS 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's long position.

The idea behind KIMBALL ELECTRONICS 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.