Correlation Between Bel Fuse and LGL
Can any of the company-specific risk be diversified away by investing in both Bel Fuse and LGL 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 LGL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bel Fuse B and LGL Group, you can compare the effects of market volatilities on Bel Fuse and LGL 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 LGL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bel Fuse and LGL.
Diversification Opportunities for Bel Fuse and LGL
Very good diversification
The 3 months correlation between Bel and LGL is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Bel Fuse B and LGL Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LGL Group 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 B are associated (or correlated) with LGL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LGL Group has no effect on the direction of Bel Fuse i.e., Bel Fuse and LGL go up and down completely randomly.
Pair Corralation between Bel Fuse and LGL
Assuming the 90 days horizon Bel Fuse B is expected to generate 1.24 times more return on investment than LGL. However, Bel Fuse is 1.24 times more volatile than LGL Group. It trades about 0.07 of its potential returns per unit of risk. LGL Group is currently generating about 0.04 per unit of risk. If you would invest 3,637 in Bel Fuse B on October 20, 2024 and sell it today you would earn a total of 4,362 from holding Bel Fuse B or generate 119.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Bel Fuse B vs. LGL Group
Performance |
| Timeline |
| Bel Fuse B |
| LGL Group |
Bel Fuse and LGL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bel Fuse and LGL
The main advantage of trading using opposite Bel Fuse and LGL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bel Fuse position performs unexpectedly, LGL 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 LGL will offset losses from the drop in LGL's long position.| Bel Fuse vs. Benchmark Electronics | Bel Fuse vs. Methode Electronics | Bel Fuse vs. Richardson 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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