Correlation Between Arrow Electronics and Willscot Mobile

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

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

Diversification Opportunities for Arrow Electronics and Willscot Mobile

-0.56

Correlation Coefficient

Arrow Electronics  Willscot Mobile

Excellent diversification

The 3 months correlation between Arrow and Willscot is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Electronics and Willscot Mobile Mini in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Willscot Mobile Mini 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 Willscot Mobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Willscot Mobile Mini has no effect on the direction of Arrow Electronics i.e., Arrow Electronics and Willscot Mobile go up and down completely randomly.

Pair Corralation between Arrow Electronics and Willscot Mobile

Considering the 90-day investment horizon Arrow Electronics is expected to generate 0.74 times more return on investment than Willscot Mobile. However, Arrow Electronics is 1.35 times less risky than Willscot Mobile. It trades about 0.1 of its potential returns per unit of risk. Willscot Mobile Mini is currently generating about -0.18 per unit of risk. If you would invest  12,019  in Arrow Electronics on March 1, 2024 and sell it today you would earn a total of  1,003  from holding Arrow Electronics or generate 8.35% return on investment over 90 days.

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

Arrow Electronics  vs.  Willscot Mobile Mini

Arrow Electronics

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Arrow Electronics are ranked lower than 8 (%) 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 June 2024.

Willscot Mobile Mini

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Willscot Mobile Mini 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 rather sound which may send shares a bit higher in June 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Arrow Electronics and Willscot Mobile

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

The idea behind Arrow Electronics and Willscot Mobile Mini 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.