Correlation Between Arrow Electronics and Tristar Acquisition

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

By analyzing existing cross correlation between Arrow Electronics and Tristar Acquisition Group, you can compare the effects of market volatilities on Arrow Electronics and Tristar Acquisition 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 Tristar Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arrow Electronics and Tristar Acquisition.

Diversification Opportunities for Arrow Electronics and Tristar Acquisition

0.6

Correlation Coefficient

Arrow Electronics  Tristar Acquisition

Poor diversification

The 3 months correlation between Arrow and Tristar is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Electronics and Tristar Acquisition Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tristar Acquisition 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 Tristar Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tristar Acquisition has no effect on the direction of Arrow Electronics i.e., Arrow Electronics and Tristar Acquisition go up and down completely randomly.

Pair Corralation between Arrow Electronics and Tristar Acquisition

If you would invest  11,490  in Arrow Electronics on September 17, 2024 and sell it today you would earn a total of  439.00  from holding Arrow Electronics or generate 3.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Arrow Electronics  vs.  Tristar Acquisition Group

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 latest uncertain performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Tristar Acquisition

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tristar Acquisition Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent technical and fundamental indicators, Tristar Acquisition reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Arrow Electronics and Tristar Acquisition

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

The idea behind Arrow Electronics and Tristar Acquisition Group 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.

Check out your portfolio center.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.