Correlation Between Bel Fuse and Bayer AG
Can any of the company-specific risk be diversified away by investing in both Bel Fuse and Bayer AG 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 Bel Fuse and Bayer AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bel Fuse A and Bayer AG, you can compare the effects of market volatilities on Bel Fuse and Bayer AG 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 Bel Fuse with a short position of Bayer AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bel Fuse and Bayer AG.
Diversification Opportunities for Bel Fuse and Bayer AG
Significant diversification
The 3 months correlation between Bel and Bayer is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Bel Fuse A and Bayer AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bayer AG and Bel Fuse 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 Bel Fuse A are associated (or correlated) with Bayer AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bayer AG has no effect on the direction of Bel Fuse i.e., Bel Fuse and Bayer AG go up and down completely randomly.
Pair Corralation between Bel Fuse and Bayer AG
Assuming the 90 days horizon Bel Fuse A is expected to generate 1.38 times more return on investment than Bayer AG. However, Bel Fuse is 1.38 times more volatile than Bayer AG. It trades about 0.09 of its potential returns per unit of risk. Bayer AG is currently generating about -0.08 per unit of risk. If you would invest 3,415 in Bel Fuse A on September 5, 2024 and sell it today you would earn a total of 6,766 from holding Bel Fuse A or generate 198.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Bel Fuse A vs. Bayer AG
Performance |
| Timeline |
| Bel Fuse A |
| Bayer AG |
Bel Fuse and Bayer AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bel Fuse and Bayer AG
The main advantage of trading using opposite Bel Fuse and Bayer AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bel Fuse position performs unexpectedly, Bayer AG 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 Bayer AG will offset losses from the drop in Bayer AG's long position.| Bel Fuse vs. Richardson Electronics | Bel Fuse vs. LSI Industries | Bel Fuse vs. Benchmark Electronics | Bel Fuse vs. Plexus Corp |
| Bayer AG vs. Jabil Circuit | Bayer AG vs. Dave Busters Entertainment | Bayer AG vs. Bel Fuse A | Bayer AG vs. Arrow Electronics |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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