Correlation Between Benchmark Electronics and Aedas Homes
Can any of the company-specific risk be diversified away by investing in both Benchmark Electronics and Aedas Homes 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 Aedas Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Benchmark Electronics and Aedas Homes SA, you can compare the effects of market volatilities on Benchmark Electronics and Aedas Homes 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 Aedas Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Benchmark Electronics and Aedas Homes.
Diversification Opportunities for Benchmark Electronics and Aedas Homes
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Benchmark and Aedas is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Benchmark Electronics and Aedas Homes SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aedas Homes SA 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 Aedas Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aedas Homes SA has no effect on the direction of Benchmark Electronics i.e., Benchmark Electronics and Aedas Homes go up and down completely randomly.
Pair Corralation between Benchmark Electronics and Aedas Homes
Assuming the 90 days horizon Benchmark Electronics is expected to generate 1.29 times less return on investment than Aedas Homes. In addition to that, Benchmark Electronics is 1.32 times more volatile than Aedas Homes SA. It trades about 0.07 of its total potential returns per unit of risk. Aedas Homes SA is currently generating about 0.11 per unit of volatility. If you would invest 965.00 in Aedas Homes SA on September 18, 2024 and sell it today you would earn a total of 1,515 from holding Aedas Homes SA or generate 156.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Benchmark Electronics vs. Aedas Homes SA
Performance |
| Timeline |
| Benchmark Electronics |
| Aedas Homes SA |
Benchmark Electronics and Aedas Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Benchmark Electronics and Aedas Homes
The main advantage of trading using opposite Benchmark Electronics and Aedas Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Benchmark Electronics position performs unexpectedly, Aedas Homes 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 Aedas Homes will offset losses from the drop in Aedas Homes' long position.| Benchmark Electronics vs. Superior Plus Corp | Benchmark Electronics vs. SIVERS SEMICONDUCTORS AB | Benchmark Electronics vs. Norsk Hydro ASA | Benchmark Electronics vs. Reliance Steel Aluminum |
| Aedas Homes vs. Lennar | Aedas Homes vs. Sekisui Chemical Co | Aedas Homes vs. Superior Plus Corp | Aedas Homes vs. SIVERS SEMICONDUCTORS AB |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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