Correlation Between Arrow Electronics and GRUPO ECOENER

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Can any of the company-specific risk be diversified away by investing in both Arrow Electronics and GRUPO ECOENER 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 GRUPO ECOENER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arrow Electronics and GRUPO ECOENER EO, you can compare the effects of market volatilities on Arrow Electronics and GRUPO ECOENER 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 GRUPO ECOENER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arrow Electronics and GRUPO ECOENER.

Diversification Opportunities for Arrow Electronics and GRUPO ECOENER

-0.41
  Correlation Coefficient

Very good diversification

The 3 months correlation between Arrow and GRUPO is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Electronics and GRUPO ECOENER EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GRUPO ECOENER EO 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 GRUPO ECOENER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GRUPO ECOENER EO has no effect on the direction of Arrow Electronics i.e., Arrow Electronics and GRUPO ECOENER go up and down completely randomly.

Pair Corralation between Arrow Electronics and GRUPO ECOENER

Assuming the 90 days horizon Arrow Electronics is expected to under-perform the GRUPO ECOENER. But the stock apears to be less risky and, when comparing its historical volatility, Arrow Electronics is 1.01 times less risky than GRUPO ECOENER. The stock trades about -0.04 of its potential returns per unit of risk. The GRUPO ECOENER EO is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  370.00  in GRUPO ECOENER EO on September 23, 2024 and sell it today you would earn a total of  55.00  from holding GRUPO ECOENER EO or generate 14.86% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Arrow Electronics  vs.  GRUPO ECOENER EO

 Performance 
       Timeline  
Arrow Electronics 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Arrow Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Arrow Electronics is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
GRUPO ECOENER EO 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in GRUPO ECOENER EO are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, GRUPO ECOENER reported solid returns over the last few months and may actually be approaching a breakup point.

Arrow Electronics and GRUPO ECOENER Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Arrow Electronics and GRUPO ECOENER

The main advantage of trading using opposite Arrow Electronics and GRUPO ECOENER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arrow Electronics position performs unexpectedly, GRUPO ECOENER 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 GRUPO ECOENER will offset losses from the drop in GRUPO ECOENER's long position.
The idea behind Arrow Electronics and GRUPO ECOENER EO 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.

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