Correlation Between Benchmark Electronics and CTS
Can any of the company-specific risk be diversified away by investing in both Benchmark Electronics and CTS 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 Benchmark Electronics and CTS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Benchmark Electronics and CTS Corporation, you can compare the effects of market volatilities on Benchmark Electronics and CTS 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 Benchmark Electronics with a short position of CTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Benchmark Electronics and CTS.
Diversification Opportunities for Benchmark Electronics and CTS
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Benchmark and CTS is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Benchmark Electronics and CTS Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTS Corporation and Benchmark Electronics 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 Benchmark Electronics are associated (or correlated) with CTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CTS Corporation has no effect on the direction of Benchmark Electronics i.e., Benchmark Electronics and CTS go up and down completely randomly.
Pair Corralation between Benchmark Electronics and CTS
Considering the 90-day investment horizon Benchmark Electronics is expected to under-perform the CTS. In addition to that, Benchmark Electronics is 1.57 times more volatile than CTS Corporation. It trades about -0.17 of its total potential returns per unit of risk. CTS Corporation is currently generating about -0.09 per unit of volatility. If you would invest 5,248 in CTS Corporation on November 4, 2024 and sell it today you would lose (139.00) from holding CTS Corporation or give up 2.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Benchmark Electronics vs. CTS Corp.
Performance |
| Timeline |
| Benchmark Electronics |
| CTS Corporation |
Benchmark Electronics and CTS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Benchmark Electronics and CTS
The main advantage of trading using opposite Benchmark Electronics and CTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Benchmark Electronics position performs unexpectedly, CTS 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 CTS will offset losses from the drop in CTS's long position.| Benchmark Electronics vs. Sanmina | Benchmark Electronics vs. Methode Electronics | Benchmark Electronics vs. OSI Systems | Benchmark Electronics vs. Celestica |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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