Correlation Between Avnet and Taitron Components

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

By analyzing existing cross correlation between Avnet Inc and Taitron Components Incorporated, you can compare the effects of market volatilities on Avnet and Taitron Components 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 Taitron Components. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avnet and Taitron Components.

Diversification Opportunities for Avnet and Taitron Components

-0.75

Correlation Coefficient

Avnet  Taitron Components

Pay attention - limited upside

The 3 months correlation between Avnet and Taitron is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Avnet Inc and Taitron Components Incorporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taitron Components 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 Taitron Components. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taitron Components has no effect on the direction of Avnet i.e., Avnet and Taitron Components go up and down completely randomly.

Pair Corralation between Avnet and Taitron Components

Considering the 90-day investment horizon Avnet Inc is expected to generate 0.55 times more return on investment than Taitron Components. However, Avnet Inc is 1.8 times less risky than Taitron Components. It trades about 0.11 of its potential returns per unit of risk. Taitron Components Incorporated is currently generating about -0.19 per unit of risk. If you would invest  5,194  in Avnet Inc on March 9, 2024 and sell it today you would earn a total of  148.00  from holding Avnet Inc or generate 2.85% return on investment over 90 days.

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

Avnet Inc  vs.  Taitron Components Incorporate

Avnet Inc

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Avnet Inc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Avnet unveiled solid returns over the last few months and may actually be approaching a breakup point.

Taitron Components

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Taitron Components Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's forward indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Avnet and Taitron Components

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

The idea behind Avnet Inc and Taitron Components Incorporated 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.