Correlation Between Benchmark Electronics and Murata Manufacturing
Can any of the company-specific risk be diversified away by investing in both Benchmark Electronics and Murata Manufacturing 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 Murata Manufacturing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Benchmark Electronics and Murata Manufacturing Co, you can compare the effects of market volatilities on Benchmark Electronics and Murata Manufacturing 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 Murata Manufacturing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Benchmark Electronics and Murata Manufacturing.
Diversification Opportunities for Benchmark Electronics and Murata Manufacturing
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Benchmark and Murata is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Benchmark Electronics and Murata Manufacturing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Murata Manufacturing 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 Murata Manufacturing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Murata Manufacturing has no effect on the direction of Benchmark Electronics i.e., Benchmark Electronics and Murata Manufacturing go up and down completely randomly.
Pair Corralation between Benchmark Electronics and Murata Manufacturing
Considering the 90-day investment horizon Benchmark Electronics is expected to generate 0.14 times more return on investment than Murata Manufacturing. However, Benchmark Electronics is 7.07 times less risky than Murata Manufacturing. It trades about 0.17 of its potential returns per unit of risk. Murata Manufacturing Co is currently generating about 0.02 per unit of risk. If you would invest 4,700 in Benchmark Electronics on October 26, 2024 and sell it today you would earn a total of 186.00 from holding Benchmark Electronics or generate 3.96% 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. Murata Manufacturing Co
Performance |
| Timeline |
| Benchmark Electronics |
| Murata Manufacturing |
Benchmark Electronics and Murata Manufacturing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Benchmark Electronics and Murata Manufacturing
The main advantage of trading using opposite Benchmark Electronics and Murata Manufacturing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Benchmark Electronics position performs unexpectedly, Murata Manufacturing 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 Murata Manufacturing will offset losses from the drop in Murata Manufacturing's long position.| Benchmark Electronics vs. Sanmina | Benchmark Electronics vs. Methode Electronics | Benchmark Electronics vs. OSI Systems | Benchmark Electronics vs. Celestica |
| Murata Manufacturing vs. OMRON Corp ADR | Murata Manufacturing vs. LGL Group | Murata Manufacturing vs. Data IO | Murata Manufacturing 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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