Correlation Between Bel Fuse and Micropac Industries
Can any of the company-specific risk be diversified away by investing in both Bel Fuse and Micropac Industries 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 Micropac Industries 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 Micropac Industries, you can compare the effects of market volatilities on Bel Fuse and Micropac Industries 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 Micropac Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bel Fuse and Micropac Industries.
Diversification Opportunities for Bel Fuse and Micropac Industries
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Bel and Micropac is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Bel Fuse B and Micropac Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micropac Industries 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 Micropac Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Micropac Industries has no effect on the direction of Bel Fuse i.e., Bel Fuse and Micropac Industries go up and down completely randomly.
Pair Corralation between Bel Fuse and Micropac Industries
Assuming the 90 days horizon Bel Fuse is expected to generate 4.36 times less return on investment than Micropac Industries. But when comparing it to its historical volatility, Bel Fuse B is 2.02 times less risky than Micropac Industries. It trades about 0.09 of its potential returns per unit of risk. Micropac Industries is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 1,595 in Micropac Industries on August 27, 2024 and sell it today you would earn a total of 375.00 from holding Micropac Industries or generate 23.51% 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 B vs. Micropac Industries
Performance |
| Timeline |
| Bel Fuse B |
| Micropac Industries |
Bel Fuse and Micropac Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bel Fuse and Micropac Industries
The main advantage of trading using opposite Bel Fuse and Micropac Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bel Fuse position performs unexpectedly, Micropac Industries 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 Micropac Industries will offset losses from the drop in Micropac Industries' long position.| Bel Fuse vs. Benchmark Electronics | Bel Fuse vs. Methode Electronics | Bel Fuse vs. Richardson Electronics | Bel Fuse vs. Plexus Corp |
| Micropac Industries vs. LGL Group | Micropac Industries vs. Deswell Industries | Micropac Industries vs. SigmaTron International | Micropac Industries vs. Daktronics |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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