Correlation Between Benchmark Electronics and MPH Health
Can any of the company-specific risk be diversified away by investing in both Benchmark Electronics and MPH Health 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 MPH Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Benchmark Electronics and MPH Health Care, you can compare the effects of market volatilities on Benchmark Electronics and MPH Health 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 MPH Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Benchmark Electronics and MPH Health.
Diversification Opportunities for Benchmark Electronics and MPH Health
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Benchmark and MPH is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Benchmark Electronics and MPH Health Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MPH Health Care 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 MPH Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MPH Health Care has no effect on the direction of Benchmark Electronics i.e., Benchmark Electronics and MPH Health go up and down completely randomly.
Pair Corralation between Benchmark Electronics and MPH Health
Assuming the 90 days horizon Benchmark Electronics is expected to generate 0.78 times more return on investment than MPH Health. However, Benchmark Electronics is 1.27 times less risky than MPH Health. It trades about 0.03 of its potential returns per unit of risk. MPH Health Care is currently generating about 0.01 per unit of risk. If you would invest 4,403 in Benchmark Electronics on October 17, 2024 and sell it today you would earn a total of 57.00 from holding Benchmark Electronics or generate 1.29% 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. MPH Health Care
Performance |
| Timeline |
| Benchmark Electronics |
| MPH Health Care |
Benchmark Electronics and MPH Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Benchmark Electronics and MPH Health
The main advantage of trading using opposite Benchmark Electronics and MPH Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Benchmark Electronics position performs unexpectedly, MPH Health 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 MPH Health will offset losses from the drop in MPH Health's long position.| Benchmark Electronics vs. Telecom Argentina SA | Benchmark Electronics vs. Fair Isaac Corp | Benchmark Electronics vs. Alaska Air Group | Benchmark Electronics vs. Shenandoah Telecommunications |
| MPH Health vs. Salesforce | MPH Health vs. Fast Retailing Co | MPH Health vs. LPKF Laser Electronics | MPH Health vs. Benchmark Electronics |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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