Correlation Between Benchmark Electronics and TT Electronics
Can any of the company-specific risk be diversified away by investing in both Benchmark Electronics and TT 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 TT 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 TT Electronics PLC, you can compare the effects of market volatilities on Benchmark Electronics and TT 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 TT Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Benchmark Electronics and TT Electronics.
Diversification Opportunities for Benchmark Electronics and TT Electronics
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Benchmark and 7TT is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Benchmark Electronics and TT Electronics PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TT Electronics PLC 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 TT Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TT Electronics PLC has no effect on the direction of Benchmark Electronics i.e., Benchmark Electronics and TT Electronics go up and down completely randomly.
Pair Corralation between Benchmark Electronics and TT Electronics
Assuming the 90 days horizon Benchmark Electronics is expected to generate 0.81 times more return on investment than TT Electronics. However, Benchmark Electronics is 1.23 times less risky than TT Electronics. It trades about 0.07 of its potential returns per unit of risk. TT Electronics PLC is currently generating about -0.01 per unit of risk. If you would invest 2,396 in Benchmark Electronics on September 18, 2024 and sell it today you would earn a total of 2,224 from holding Benchmark Electronics or generate 92.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Benchmark Electronics vs. TT Electronics PLC
Performance |
| Timeline |
| Benchmark Electronics |
| TT Electronics PLC |
Benchmark Electronics and TT Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Benchmark Electronics and TT Electronics
The main advantage of trading using opposite Benchmark Electronics and TT Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Benchmark Electronics position performs unexpectedly, TT 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 TT Electronics will offset losses from the drop in TT Electronics' 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 |
| TT Electronics vs. Apple Inc | TT Electronics vs. Apple Inc | TT Electronics vs. Apple Inc | TT Electronics vs. Apple Inc |
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.
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