Correlation Between Arm Holdings and Pool

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

By analyzing existing cross correlation between Arm Holdings plc and Pool Corporation, you can compare the effects of market volatilities on Arm Holdings and Pool 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 Arm Holdings with a short position of Pool. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arm Holdings and Pool.

Diversification Opportunities for Arm Holdings and Pool

-0.07

Correlation Coefficient

Arm Holdings  Pool

Good diversification

The 3 months correlation between Arm and Pool is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Arm Holdings plc and Pool Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pool and Arm Holdings 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 Arm Holdings plc are associated (or correlated) with Pool. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pool has no effect on the direction of Arm Holdings i.e., Arm Holdings and Pool go up and down completely randomly.

Pair Corralation between Arm Holdings and Pool

Considering the 90-day investment horizon Arm Holdings plc is expected to generate 1.55 times more return on investment than Pool. However, Arm Holdings is 1.55 times more volatile than Pool Corporation. It trades about 0.05 of its potential returns per unit of risk. Pool Corporation is currently generating about 0.02 per unit of risk. If you would invest  13,205  in Arm Holdings plc on May 17, 2025 and sell it today you would earn a total of  850.00  from holding Arm Holdings plc or generate 6.44% return on investment over 90 days.

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

Arm Holdings plc  vs.  Pool Corp.

Arm Holdings plc

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Arm Holdings plc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Arm Holdings may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pool

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pool Corporation are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Pool is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Arm Holdings and Pool

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

The idea behind Arm Holdings plc and Pool Corporation 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.