Correlation Between Benchmark Electronics and Fabrinet
Can any of the company-specific risk be diversified away by investing in both Benchmark Electronics 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 Benchmark Electronics and Fabrinet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Benchmark Electronics and Fabrinet, you can compare the effects of market volatilities on Benchmark Electronics 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 Benchmark Electronics with a short position of Fabrinet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Benchmark Electronics and Fabrinet.
Diversification Opportunities for Benchmark Electronics and Fabrinet
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Benchmark and Fabrinet is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Benchmark Electronics and Fabrinet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fabrinet 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 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 Benchmark Electronics i.e., Benchmark Electronics and Fabrinet go up and down completely randomly.
Pair Corralation between Benchmark Electronics and Fabrinet
Considering the 90-day investment horizon Benchmark Electronics is expected to generate 0.78 times more return on investment than Fabrinet. However, Benchmark Electronics is 1.29 times less risky than Fabrinet. It trades about 0.16 of its potential returns per unit of risk. Fabrinet is currently generating about -0.06 per unit of risk. If you would invest 4,295 in Benchmark Electronics on August 24, 2024 and sell it today you would earn a total of 470.00 from holding Benchmark Electronics or generate 10.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Benchmark Electronics vs. Fabrinet
Performance |
| Timeline |
| Benchmark Electronics |
| Fabrinet |
Benchmark Electronics and Fabrinet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Benchmark Electronics and Fabrinet
The main advantage of trading using opposite Benchmark Electronics and Fabrinet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Benchmark Electronics 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.| Benchmark Electronics vs. Plexus Corp | Benchmark Electronics vs. Jabil Circuit | Benchmark Electronics vs. Rogers | Benchmark Electronics vs. Sanmina |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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