Correlation Between American Aires and Benchmark Electronics
Can any of the company-specific risk be diversified away by investing in both American Aires and Benchmark 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 American Aires and Benchmark Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Aires and Benchmark Electronics, you can compare the effects of market volatilities on American Aires and Benchmark 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 American Aires with a short position of Benchmark Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Aires and Benchmark Electronics.
Diversification Opportunities for American Aires and Benchmark Electronics
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between American and Benchmark is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding American Aires and Benchmark Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Benchmark Electronics and American Aires 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 American Aires are associated (or correlated) with Benchmark Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Benchmark Electronics has no effect on the direction of American Aires i.e., American Aires and Benchmark Electronics go up and down completely randomly.
Pair Corralation between American Aires and Benchmark Electronics
Assuming the 90 days horizon American Aires is expected to generate 8.2 times more return on investment than Benchmark Electronics. However, American Aires is 8.2 times more volatile than Benchmark Electronics. It trades about 0.07 of its potential returns per unit of risk. Benchmark Electronics is currently generating about 0.06 per unit of risk. If you would invest 11.00 in American Aires on November 4, 2024 and sell it today you would earn a total of 3.00 from holding American Aires or generate 27.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
American Aires vs. Benchmark Electronics
Performance |
| Timeline |
| American Aires |
| Benchmark Electronics |
American Aires and Benchmark Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Aires and Benchmark Electronics
The main advantage of trading using opposite American Aires and Benchmark Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Aires position performs unexpectedly, Benchmark 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 Benchmark Electronics will offset losses from the drop in Benchmark Electronics' long position.| American Aires vs. alpha En | American Aires vs. Alps Electric Co | American Aires vs. Bitmine Immersion Technologies | American Aires vs. AT S Austria |
| Benchmark Electronics vs. Sanmina | Benchmark Electronics vs. Methode Electronics | Benchmark Electronics vs. OSI Systems | Benchmark Electronics vs. Celestica |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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