Correlation Between Bel Fuse and ECD Automotive
Can any of the company-specific risk be diversified away by investing in both Bel Fuse and ECD Automotive 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 ECD Automotive 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 ECD Automotive Design, you can compare the effects of market volatilities on Bel Fuse and ECD Automotive 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 ECD Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bel Fuse and ECD Automotive.
Diversification Opportunities for Bel Fuse and ECD Automotive
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bel and ECD is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Bel Fuse A and ECD Automotive Design in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECD Automotive Design 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 ECD Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECD Automotive Design has no effect on the direction of Bel Fuse i.e., Bel Fuse and ECD Automotive go up and down completely randomly.
Pair Corralation between Bel Fuse and ECD Automotive
Assuming the 90 days horizon Bel Fuse A is expected to generate 0.5 times more return on investment than ECD Automotive. However, Bel Fuse A is 2.01 times less risky than ECD Automotive. It trades about 0.07 of its potential returns per unit of risk. ECD Automotive Design is currently generating about -0.05 per unit of risk. If you would invest 3,802 in Bel Fuse A on November 27, 2024 and sell it today you would earn a total of 4,622 from holding Bel Fuse A or generate 121.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.59% |
| Values | Daily Returns |
Bel Fuse A vs. ECD Automotive Design
Performance |
| Timeline |
| Bel Fuse A |
| ECD Automotive Design |
Bel Fuse and ECD Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bel Fuse and ECD Automotive
The main advantage of trading using opposite Bel Fuse and ECD Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bel Fuse position performs unexpectedly, ECD Automotive 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 ECD Automotive will offset losses from the drop in ECD Automotive's long position.| Bel Fuse vs. Richardson Electronics | Bel Fuse vs. LSI Industries | Bel Fuse vs. Benchmark Electronics | Bel Fuse vs. Plexus Corp |
| ECD Automotive vs. Rocky Brands | ECD Automotive vs. Figs Inc | ECD Automotive vs. RBC Bearings Incorporated | ECD Automotive vs. Jerash Holdings |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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