Correlation Between Sphere 3D and Arrow Electronics

Can any of the company-specific risk be diversified away by investing in both Sphere 3D and Arrow Electronics 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 Sphere 3D and Arrow Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sphere 3D Corp and Arrow Electronics, you can compare the effects of market volatilities on Sphere 3D and Arrow Electronics 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 Sphere 3D with a short position of Arrow Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sphere 3D and Arrow Electronics.

Diversification Opportunities for Sphere 3D and Arrow Electronics

-0.8

Correlation Coefficient

Sphere 3D  Arrow Electronics

Pay attention - limited upside

The 3 months correlation between Sphere and Arrow is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Sphere 3D Corp and Arrow Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Electronics and Sphere 3D 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 Sphere 3D Corp are associated (or correlated) with Arrow Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrow Electronics has no effect on the direction of Sphere 3D i.e., Sphere 3D and Arrow Electronics go up and down completely randomly.

Pair Corralation between Sphere 3D and Arrow Electronics

Considering the 90-day investment horizon Sphere 3D Corp is expected to under-perform the Arrow Electronics. In addition to that, Sphere 3D is 3.58 times more volatile than Arrow Electronics. It trades about -0.16 of its total potential returns per unit of risk. Arrow Electronics is currently generating about 0.05 per unit of volatility. If you would invest  12,609  in Arrow Electronics on January 26, 2024 and sell it today you would earn a total of  149.00  from holding Arrow Electronics or generate 1.18% return on investment over 90 days.

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

Sphere 3D Corp  vs.  Arrow Electronics

Sphere 3D Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sphere 3D Corp 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 strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Arrow Electronics

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Arrow Electronics are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Arrow Electronics may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Sphere 3D and Arrow Electronics

The main advantage of trading using opposite Sphere 3D and Arrow Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sphere 3D position performs unexpectedly, Arrow Electronics 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 Arrow Electronics will offset losses from the drop in Arrow Electronics' long position.

The idea behind Sphere 3D Corp and Arrow Electronics 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.