Correlation Between Benchmark Electronics and Methode Electronics
Can any of the company-specific risk be diversified away by investing in both Benchmark Electronics and Methode Electronics 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 Methode Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Benchmark Electronics and Methode Electronics, you can compare the effects of market volatilities on Benchmark Electronics and Methode Electronics 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 Methode Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Benchmark Electronics and Methode Electronics.
Diversification Opportunities for Benchmark Electronics and Methode Electronics
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Benchmark and Methode is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Benchmark Electronics and Methode Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Methode Electronics 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 Methode Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Methode Electronics has no effect on the direction of Benchmark Electronics i.e., Benchmark Electronics and Methode Electronics go up and down completely randomly.
Pair Corralation between Benchmark Electronics and Methode Electronics
Considering the 90-day investment horizon Benchmark Electronics is expected to generate 1.63 times less return on investment than Methode Electronics. But when comparing it to its historical volatility, Benchmark Electronics is 1.28 times less risky than Methode Electronics. It trades about 0.12 of its potential returns per unit of risk. Methode Electronics is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 953.00 in Methode Electronics on August 27, 2024 and sell it today you would earn a total of 116.00 from holding Methode Electronics or generate 12.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Benchmark Electronics vs. Methode Electronics
Performance |
| Timeline |
| Benchmark Electronics |
| Methode Electronics |
Benchmark Electronics and Methode Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Benchmark Electronics and Methode Electronics
The main advantage of trading using opposite Benchmark Electronics and Methode Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Benchmark Electronics position performs unexpectedly, Methode Electronics 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 Methode Electronics will offset losses from the drop in Methode Electronics' long position.| Benchmark Electronics vs. Plexus Corp | Benchmark Electronics vs. Jabil Circuit | Benchmark Electronics vs. Sanmina | Benchmark Electronics vs. Methode Electronics |
| Methode Electronics vs. Sanmina | Methode Electronics vs. Benchmark Electronics | Methode Electronics vs. OSI Systems | Methode 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
Other Complementary Tools
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |