Correlation Between Benchmark Electronics and Pilgrims Pride
Can any of the company-specific risk be diversified away by investing in both Benchmark Electronics and Pilgrims Pride 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 Pilgrims Pride into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Benchmark Electronics and Pilgrims Pride, you can compare the effects of market volatilities on Benchmark Electronics and Pilgrims Pride 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 Pilgrims Pride. Check out your portfolio center. Please also check ongoing floating volatility patterns of Benchmark Electronics and Pilgrims Pride.
Diversification Opportunities for Benchmark Electronics and Pilgrims Pride
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Benchmark and Pilgrims is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Benchmark Electronics and Pilgrims Pride in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pilgrims Pride 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 Pilgrims Pride. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pilgrims Pride has no effect on the direction of Benchmark Electronics i.e., Benchmark Electronics and Pilgrims Pride go up and down completely randomly.
Pair Corralation between Benchmark Electronics and Pilgrims Pride
Assuming the 90 days horizon Benchmark Electronics is expected to generate 2.73 times less return on investment than Pilgrims Pride. In addition to that, Benchmark Electronics is 1.33 times more volatile than Pilgrims Pride. It trades about 0.04 of its total potential returns per unit of risk. Pilgrims Pride is currently generating about 0.15 per unit of volatility. If you would invest 3,260 in Pilgrims Pride on August 29, 2024 and sell it today you would earn a total of 1,580 from holding Pilgrims Pride or generate 48.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.22% |
| Values | Daily Returns |
Benchmark Electronics vs. Pilgrims Pride
Performance |
| Timeline |
| Benchmark Electronics |
| Pilgrims Pride |
Benchmark Electronics and Pilgrims Pride Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Benchmark Electronics and Pilgrims Pride
The main advantage of trading using opposite Benchmark Electronics and Pilgrims Pride positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Benchmark Electronics position performs unexpectedly, Pilgrims Pride 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 Pilgrims Pride will offset losses from the drop in Pilgrims Pride's long position.| Benchmark Electronics vs. Diamyd Medical AB | Benchmark Electronics vs. Aluminum of | Benchmark Electronics vs. Merit Medical Systems | Benchmark Electronics vs. AVITA Medical |
| Pilgrims Pride vs. AUSTEVOLL SEAFOOD | Pilgrims Pride vs. STORE ELECTRONIC | Pilgrims Pride vs. Benchmark Electronics | Pilgrims Pride vs. Monster Beverage Corp |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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