Correlation Between Bel Fuse and Eltek
Can any of the company-specific risk be diversified away by investing in both Bel Fuse and Eltek 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 Eltek 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 Eltek, you can compare the effects of market volatilities on Bel Fuse and Eltek 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 Eltek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bel Fuse and Eltek.
Diversification Opportunities for Bel Fuse and Eltek
Very good diversification
The 3 months correlation between Bel and Eltek is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Bel Fuse A and Eltek in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eltek 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 Eltek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eltek has no effect on the direction of Bel Fuse i.e., Bel Fuse and Eltek go up and down completely randomly.
Pair Corralation between Bel Fuse and Eltek
Assuming the 90 days horizon Bel Fuse A is expected to generate 0.73 times more return on investment than Eltek. However, Bel Fuse A is 1.38 times less risky than Eltek. It trades about 0.12 of its potential returns per unit of risk. Eltek is currently generating about -0.02 per unit of risk. If you would invest 5,937 in Bel Fuse A on August 27, 2024 and sell it today you would earn a total of 3,654 from holding Bel Fuse A or generate 61.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bel Fuse A vs. Eltek
Performance |
| Timeline |
| Bel Fuse A |
| Eltek |
Bel Fuse and Eltek Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bel Fuse and Eltek
The main advantage of trading using opposite Bel Fuse and Eltek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bel Fuse position performs unexpectedly, Eltek 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 Eltek will offset losses from the drop in Eltek'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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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