Correlation Between Benchmark Electronics and Federal Home
Can any of the company-specific risk be diversified away by investing in both Benchmark Electronics and Federal Home 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 Federal Home into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Benchmark Electronics and Federal Home Loan, you can compare the effects of market volatilities on Benchmark Electronics and Federal Home 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 Federal Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of Benchmark Electronics and Federal Home.
Diversification Opportunities for Benchmark Electronics and Federal Home
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Benchmark and Federal is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Benchmark Electronics and Federal Home Loan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Home Loan 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 Federal Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Home Loan has no effect on the direction of Benchmark Electronics i.e., Benchmark Electronics and Federal Home go up and down completely randomly.
Pair Corralation between Benchmark Electronics and Federal Home
Considering the 90-day investment horizon Benchmark Electronics is expected to generate 9.81 times less return on investment than Federal Home. But when comparing it to its historical volatility, Benchmark Electronics is 5.05 times less risky than Federal Home. It trades about 0.13 of its potential returns per unit of risk. Federal Home Loan is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 725.00 in Federal Home Loan on August 25, 2024 and sell it today you would earn a total of 733.00 from holding Federal Home Loan or generate 101.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Benchmark Electronics vs. Federal Home Loan
Performance |
| Timeline |
| Benchmark Electronics |
| Federal Home Loan |
Benchmark Electronics and Federal Home Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Benchmark Electronics and Federal Home
The main advantage of trading using opposite Benchmark Electronics and Federal Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Benchmark Electronics position performs unexpectedly, Federal Home 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 Federal Home will offset losses from the drop in Federal Home's long position.| Benchmark Electronics vs. Sanmina | Benchmark Electronics vs. Methode Electronics | Benchmark Electronics vs. OSI Systems | Benchmark Electronics vs. Celestica |
| Federal Home vs. Federal National Mortgage | Federal Home vs. Federal National Mortgage | Federal Home vs. Federal National Mortgage | Federal Home vs. Federal National Mortgage |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |