Correlation Between Arrow Electronics and INGERSOLL

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

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

Diversification Opportunities for Arrow Electronics and INGERSOLL

-0.4

Correlation Coefficient

Arrow Electronics  INGERSOLL

Very good diversification

The 3 months correlation between Arrow and INGERSOLL is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Electronics and INGERSOLL RAND LUXEMBOURG FIN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INGERSOLL RAND LUXEM 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 INGERSOLL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INGERSOLL RAND LUXEM has no effect on the direction of Arrow Electronics i.e., Arrow Electronics and INGERSOLL go up and down completely randomly.

Pair Corralation between Arrow Electronics and INGERSOLL

Considering the 90-day investment horizon Arrow Electronics is expected to under-perform the INGERSOLL. But the stock apears to be less risky and, when comparing its historical volatility, Arrow Electronics is 2.14 times less risky than INGERSOLL. The stock trades about -0.01 of its potential returns per unit of risk. The INGERSOLL RAND LUXEMBOURG FIN is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  9,023  in INGERSOLL RAND LUXEMBOURG FIN on September 29, 2024 and sell it today you would lose (71.00) from holding INGERSOLL RAND LUXEMBOURG FIN or give up 0.79% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	34.13%
Values	Daily Returns

Arrow Electronics  vs.  INGERSOLL RAND LUXEMBOURG FIN

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 uncertain performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

INGERSOLL RAND LUXEM

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INGERSOLL RAND LUXEMBOURG FIN has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for INGERSOLL RAND LUXEMBOURG FIN investors.

Pair Trading with Arrow Electronics and INGERSOLL

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

The idea behind Arrow Electronics and INGERSOLL RAND LUXEMBOURG FIN 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.