Correlation Between Bel Fuse and Fabrinet
Can any of the company-specific risk be diversified away by investing in both Bel Fuse and Fabrinet 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 Fabrinet 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 Fabrinet, you can compare the effects of market volatilities on Bel Fuse and Fabrinet 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 Fabrinet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bel Fuse and Fabrinet.
Diversification Opportunities for Bel Fuse and Fabrinet
Very weak diversification
The 3 months correlation between Bel and Fabrinet is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Bel Fuse A and Fabrinet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fabrinet 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 Fabrinet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fabrinet has no effect on the direction of Bel Fuse i.e., Bel Fuse and Fabrinet go up and down completely randomly.
Pair Corralation between Bel Fuse and Fabrinet
Assuming the 90 days horizon Bel Fuse A is expected to generate 0.51 times more return on investment than Fabrinet. However, Bel Fuse A is 1.97 times less risky than Fabrinet. It trades about -0.02 of its potential returns per unit of risk. Fabrinet is currently generating about -0.01 per unit of risk. If you would invest 9,841 in Bel Fuse A on August 28, 2024 and sell it today you would lose (238.00) from holding Bel Fuse A or give up 2.42% 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. Fabrinet
Performance |
| Timeline |
| Bel Fuse A |
| Fabrinet |
Bel Fuse and Fabrinet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bel Fuse and Fabrinet
The main advantage of trading using opposite Bel Fuse and Fabrinet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bel Fuse position performs unexpectedly, Fabrinet 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 Fabrinet will offset losses from the drop in Fabrinet'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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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