Correlation Between Benchmark Electronics and LSI Industries
Can any of the company-specific risk be diversified away by investing in both Benchmark Electronics and LSI 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 Benchmark Electronics and LSI Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Benchmark Electronics and LSI Industries, you can compare the effects of market volatilities on Benchmark Electronics and LSI 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 Benchmark Electronics with a short position of LSI Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Benchmark Electronics and LSI Industries.
Diversification Opportunities for Benchmark Electronics and LSI Industries
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Benchmark and LSI is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Benchmark Electronics and LSI Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LSI Industries 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 LSI Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LSI Industries has no effect on the direction of Benchmark Electronics i.e., Benchmark Electronics and LSI Industries go up and down completely randomly.
Pair Corralation between Benchmark Electronics and LSI Industries
Considering the 90-day investment horizon Benchmark Electronics is expected to generate 0.71 times more return on investment than LSI Industries. However, Benchmark Electronics is 1.4 times less risky than LSI Industries. It trades about 0.19 of its potential returns per unit of risk. LSI Industries is currently generating about 0.06 per unit of risk. If you would invest 4,617 in Benchmark Electronics on October 24, 2024 and sell it today you would earn a total of 191.00 from holding Benchmark Electronics or generate 4.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Benchmark Electronics vs. LSI Industries
Performance |
| Timeline |
| Benchmark Electronics |
| LSI Industries |
Benchmark Electronics and LSI Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Benchmark Electronics and LSI Industries
The main advantage of trading using opposite Benchmark Electronics and LSI Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Benchmark Electronics position performs unexpectedly, LSI 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 LSI Industries will offset losses from the drop in LSI Industries' long position.| Benchmark Electronics vs. Sanmina | Benchmark Electronics vs. Methode Electronics | Benchmark Electronics vs. OSI Systems | Benchmark Electronics vs. Celestica |
| LSI Industries vs. Plexus Corp | LSI Industries vs. OSI Systems | LSI Industries vs. CTS Corporation | LSI Industries vs. Benchmark Electronics |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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