Correlation Between Bel Fuse and European Wax
Can any of the company-specific risk be diversified away by investing in both Bel Fuse and European Wax 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 European Wax 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 European Wax Center, you can compare the effects of market volatilities on Bel Fuse and European Wax 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 European Wax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bel Fuse and European Wax.
Diversification Opportunities for Bel Fuse and European Wax
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Bel and European is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Bel Fuse A and European Wax Center in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on European Wax Center 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 European Wax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of European Wax Center has no effect on the direction of Bel Fuse i.e., Bel Fuse and European Wax go up and down completely randomly.
Pair Corralation between Bel Fuse and European Wax
Assuming the 90 days horizon Bel Fuse A is expected to generate 0.53 times more return on investment than European Wax. However, Bel Fuse A is 1.89 times less risky than European Wax. It trades about 0.06 of its potential returns per unit of risk. European Wax Center is currently generating about -0.09 per unit of risk. If you would invest 8,446 in Bel Fuse A on August 31, 2024 and sell it today you would earn a total of 1,220 from holding Bel Fuse A or generate 14.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bel Fuse A vs. European Wax Center
Performance |
| Timeline |
| Bel Fuse A |
| European Wax Center |
Bel Fuse and European Wax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bel Fuse and European Wax
The main advantage of trading using opposite Bel Fuse and European Wax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bel Fuse position performs unexpectedly, European Wax 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 European Wax will offset losses from the drop in European Wax's long position.| Bel Fuse vs. Sanmina | Bel Fuse vs. Benchmark Electronics | Bel Fuse vs. Celestica | Bel Fuse vs. CTS Corporation |
| European Wax vs. Edgewell Personal Care | European Wax vs. Inter Parfums | European Wax vs. Henkel AG Co | European Wax vs. Mannatech Incorporated |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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