Correlation Between Avnet and Climb Global

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

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

Diversification Opportunities for Avnet and Climb Global

0.47

Correlation Coefficient

Avnet  Climb Global

Very weak diversification

The 3 months correlation between Avnet and Climb is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Avnet Inc and Climb Global Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Climb Global Solutions and Avnet 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 Avnet Inc are associated (or correlated) with Climb Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Climb Global Solutions has no effect on the direction of Avnet i.e., Avnet and Climb Global go up and down completely randomly.

Pair Corralation between Avnet and Climb Global

Considering the 90-day investment horizon Avnet is expected to generate 6.73 times less return on investment than Climb Global. But when comparing it to its historical volatility, Avnet Inc is 1.69 times less risky than Climb Global. It trades about 0.06 of its potential returns per unit of risk. Climb Global Solutions is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  9,035  in Climb Global Solutions on September 3, 2024 and sell it today you would earn a total of  4,426  from holding Climb Global Solutions or generate 48.99% return on investment over 90 days.

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

Avnet Inc  vs.  Climb Global Solutions

Avnet Inc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Avnet Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Avnet is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Climb Global Solutions

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Climb Global Solutions are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak primary indicators, Climb Global sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Avnet and Climb Global

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

The idea behind Avnet Inc and Climb Global Solutions 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .