Correlation Between Applied Materials and ARROW ELECTRONICS
Can any of the company-specific risk be diversified away by investing in both Applied Materials 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 Applied Materials and ARROW ELECTRONICS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Materials and ARROW ELECTRONICS, you can compare the effects of market volatilities on Applied Materials 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 Applied Materials with a short position of ARROW ELECTRONICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Materials and ARROW ELECTRONICS.
Diversification Opportunities for Applied Materials and ARROW ELECTRONICS
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Applied and ARROW is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Applied Materials and ARROW ELECTRONICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARROW ELECTRONICS and Applied Materials 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 Applied Materials 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 Applied Materials i.e., Applied Materials and ARROW ELECTRONICS go up and down completely randomly.
Pair Corralation between Applied Materials and ARROW ELECTRONICS
Assuming the 90 days horizon Applied Materials is expected to generate 1.21 times more return on investment than ARROW ELECTRONICS. However, Applied Materials is 1.21 times more volatile than ARROW ELECTRONICS. It trades about 0.1 of its potential returns per unit of risk. ARROW ELECTRONICS is currently generating about -0.05 per unit of risk. If you would invest 16,252 in Applied Materials on July 26, 2025 and sell it today you would earn a total of 3,128 from holding Applied Materials or generate 19.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Applied Materials vs. ARROW ELECTRONICS
Performance |
| Timeline |
| Applied Materials |
| ARROW ELECTRONICS |
Applied Materials and ARROW ELECTRONICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Materials and ARROW ELECTRONICS
The main advantage of trading using opposite Applied Materials and ARROW ELECTRONICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Materials 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's long position.| Applied Materials vs. PULSION Medical Systems | Applied Materials vs. XTANT MEDICAL HLDGS | Applied Materials vs. TRAINLINE PLC LS | Applied Materials vs. Fresenius Medical Care |
| ARROW ELECTRONICS vs. UNIQA INSURANCE GR | ARROW ELECTRONICS vs. AUTO TRADER ADR | ARROW ELECTRONICS vs. MARKET VECTR RETAIL | ARROW ELECTRONICS vs. TRADEGATE |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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