Correlation Between Benchmark Electronics and Bayer Aktiengesellscha
Can any of the company-specific risk be diversified away by investing in both Benchmark Electronics and Bayer Aktiengesellscha 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 Bayer Aktiengesellscha into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Benchmark Electronics and Bayer Aktiengesellschaft, you can compare the effects of market volatilities on Benchmark Electronics and Bayer Aktiengesellscha 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 Bayer Aktiengesellscha. Check out your portfolio center. Please also check ongoing floating volatility patterns of Benchmark Electronics and Bayer Aktiengesellscha.
Diversification Opportunities for Benchmark Electronics and Bayer Aktiengesellscha
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Benchmark and Bayer is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Benchmark Electronics and Bayer Aktiengesellschaft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bayer Aktiengesellschaft 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 Bayer Aktiengesellscha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bayer Aktiengesellschaft has no effect on the direction of Benchmark Electronics i.e., Benchmark Electronics and Bayer Aktiengesellscha go up and down completely randomly.
Pair Corralation between Benchmark Electronics and Bayer Aktiengesellscha
Assuming the 90 days horizon Benchmark Electronics is expected to generate 0.63 times more return on investment than Bayer Aktiengesellscha. However, Benchmark Electronics is 1.58 times less risky than Bayer Aktiengesellscha. It trades about 0.11 of its potential returns per unit of risk. Bayer Aktiengesellschaft is currently generating about -0.04 per unit of risk. If you would invest 2,232 in Benchmark Electronics on September 1, 2024 and sell it today you would earn a total of 2,288 from holding Benchmark Electronics or generate 102.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.64% |
| Values | Daily Returns |
Benchmark Electronics vs. Bayer Aktiengesellschaft
Performance |
| Timeline |
| Benchmark Electronics |
| Bayer Aktiengesellschaft |
Benchmark Electronics and Bayer Aktiengesellscha Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Benchmark Electronics and Bayer Aktiengesellscha
The main advantage of trading using opposite Benchmark Electronics and Bayer Aktiengesellscha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Benchmark Electronics position performs unexpectedly, Bayer Aktiengesellscha 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 Bayer Aktiengesellscha will offset losses from the drop in Bayer Aktiengesellscha's long position.| Benchmark Electronics vs. METHODE ELECTRONICS | Benchmark Electronics vs. Soken Chemical Engineering | Benchmark Electronics vs. KIMBALL ELECTRONICS | Benchmark Electronics vs. Quaker Chemical |
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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