Correlation Between Arrow Electronics and CONOCOPHILLIPS

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

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

Diversification Opportunities for Arrow Electronics and CONOCOPHILLIPS

0.39

Correlation Coefficient

Arrow Electronics  CONOCOPHILLIPS

Weak diversification

The 3 months correlation between Arrow and CONOCOPHILLIPS is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Electronics and CONOCOPHILLIPS CDA FDG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CONOCOPHILLIPS CDA FDG 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 CONOCOPHILLIPS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CONOCOPHILLIPS CDA FDG has no effect on the direction of Arrow Electronics i.e., Arrow Electronics and CONOCOPHILLIPS go up and down completely randomly.

Pair Corralation between Arrow Electronics and CONOCOPHILLIPS

Considering the 90-day investment horizon Arrow Electronics is expected to under-perform the CONOCOPHILLIPS. In addition to that, Arrow Electronics is 1.48 times more volatile than CONOCOPHILLIPS CDA FDG. It trades about -0.01 of its total potential returns per unit of risk. CONOCOPHILLIPS CDA FDG is currently generating about 0.01 per unit of volatility. If you would invest  10,624  in CONOCOPHILLIPS CDA FDG on September 13, 2024 and sell it today you would earn a total of  37.00  from holding CONOCOPHILLIPS CDA FDG or generate 0.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	48.63%
Values	Daily Returns

Arrow Electronics  vs.  CONOCOPHILLIPS CDA FDG

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 fairly stable basic indicators, Arrow Electronics is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

CONOCOPHILLIPS CDA FDG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CONOCOPHILLIPS CDA FDG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for CONOCOPHILLIPS CDA FDG investors.

Pair Trading with Arrow Electronics and CONOCOPHILLIPS

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

The idea behind Arrow Electronics and CONOCOPHILLIPS CDA FDG 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.