Correlation Between Bel Fuse and CTS
Can any of the company-specific risk be diversified away by investing in both Bel Fuse and CTS 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 CTS 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 CTS Corporation, you can compare the effects of market volatilities on Bel Fuse and CTS 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 CTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bel Fuse and CTS.
Diversification Opportunities for Bel Fuse and CTS
Very weak diversification
The 3 months correlation between Bel and CTS is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Bel Fuse A and CTS Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTS Corporation 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 CTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CTS Corporation has no effect on the direction of Bel Fuse i.e., Bel Fuse and CTS go up and down completely randomly.
Pair Corralation between Bel Fuse and CTS
Assuming the 90 days horizon Bel Fuse A is expected to under-perform the CTS. In addition to that, Bel Fuse is 1.91 times more volatile than CTS Corporation. It trades about -0.11 of its total potential returns per unit of risk. CTS Corporation is currently generating about -0.09 per unit of volatility. If you would invest 5,248 in CTS Corporation on November 4, 2024 and sell it today you would lose (139.00) from holding CTS Corporation or give up 2.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bel Fuse A vs. CTS Corp.
Performance |
| Timeline |
| Bel Fuse A |
| CTS Corporation |
Bel Fuse and CTS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bel Fuse and CTS
The main advantage of trading using opposite Bel Fuse and CTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bel Fuse position performs unexpectedly, CTS 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 CTS will offset losses from the drop in CTS's long position.| Bel Fuse vs. Richardson Electronics | Bel Fuse vs. LSI Industries | Bel Fuse vs. Benchmark Electronics | Bel Fuse vs. Plexus Corp |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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