Correlation Between SIMON and Arrow Electronics

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

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

Diversification Opportunities for SIMON and Arrow Electronics

0.33

Correlation Coefficient

SIMON  Arrow Electronics

Weak diversification

The 3 months correlation between SIMON and Arrow is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding SIMON PROPERTY GROUP and Arrow Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Electronics and SIMON 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 SIMON PROPERTY GROUP 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 SIMON i.e., SIMON and Arrow Electronics go up and down completely randomly.

Pair Corralation between SIMON and Arrow Electronics

Assuming the 90 days trading horizon SIMON PROPERTY GROUP is expected to under-perform the Arrow Electronics. But the bond apears to be less risky and, when comparing its historical volatility, SIMON PROPERTY GROUP is 2.19 times less risky than Arrow Electronics. The bond trades about -0.08 of its potential returns per unit of risk. The Arrow Electronics is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  11,869  in Arrow Electronics on May 21, 2025 and sell it today you would earn a total of  480.00  from holding Arrow Electronics or generate 4.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

SIMON PROPERTY GROUP  vs.  Arrow Electronics

SIMON PROPERTY GROUP

Risk-Adjusted Performance

Weakest

Over the last 90 days SIMON PROPERTY GROUP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, SIMON is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Arrow Electronics

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Arrow Electronics are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Arrow Electronics is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with SIMON and Arrow Electronics

The main advantage of trading using opposite SIMON and Arrow Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIMON 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 SIMON PROPERTY GROUP 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.