Correlation Between Benchmark Electronics and Research Frontiers
Can any of the company-specific risk be diversified away by investing in both Benchmark Electronics and Research Frontiers 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 Research Frontiers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Benchmark Electronics and Research Frontiers Incorporated, you can compare the effects of market volatilities on Benchmark Electronics and Research Frontiers 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 Research Frontiers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Benchmark Electronics and Research Frontiers.
Diversification Opportunities for Benchmark Electronics and Research Frontiers
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Benchmark and Research is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Benchmark Electronics and Research Frontiers Incorporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Research Frontiers 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 Research Frontiers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Research Frontiers has no effect on the direction of Benchmark Electronics i.e., Benchmark Electronics and Research Frontiers go up and down completely randomly.
Pair Corralation between Benchmark Electronics and Research Frontiers
Considering the 90-day investment horizon Benchmark Electronics is expected to generate 0.99 times more return on investment than Research Frontiers. However, Benchmark Electronics is 1.01 times less risky than Research Frontiers. It trades about 0.12 of its potential returns per unit of risk. Research Frontiers Incorporated is currently generating about -0.17 per unit of risk. If you would invest 4,517 in Benchmark Electronics on August 27, 2024 and sell it today you would earn a total of 330.00 from holding Benchmark Electronics or generate 7.31% 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. Research Frontiers Incorporate
Performance |
| Timeline |
| Benchmark Electronics |
| Research Frontiers |
Benchmark Electronics and Research Frontiers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Benchmark Electronics and Research Frontiers
The main advantage of trading using opposite Benchmark Electronics and Research Frontiers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Benchmark Electronics position performs unexpectedly, Research Frontiers 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 Research Frontiers will offset losses from the drop in Research Frontiers' long position.| Benchmark Electronics vs. Plexus Corp | Benchmark Electronics vs. Jabil Circuit | Benchmark Electronics vs. Sanmina | Benchmark Electronics vs. Methode Electronics |
| Research Frontiers vs. Richardson Electronics | Research Frontiers vs. Orion Energy Systems | Research Frontiers vs. RF Industries | Research Frontiers vs. Reading International |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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