Correlation Between Benchmark Electronics and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Benchmark Electronics and Dow Jones 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 Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Benchmark Electronics and Dow Jones Industrial, you can compare the effects of market volatilities on Benchmark Electronics and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Benchmark Electronics and Dow Jones.
Diversification Opportunities for Benchmark Electronics and Dow Jones
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Benchmark and Dow is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Benchmark Electronics and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Benchmark Electronics i.e., Benchmark Electronics and Dow Jones go up and down completely randomly.
Pair Corralation between Benchmark Electronics and Dow Jones
Assuming the 90 days horizon Benchmark Electronics is expected to generate 2.14 times more return on investment than Dow Jones. However, Benchmark Electronics is 2.14 times more volatile than Dow Jones Industrial. It trades about 0.07 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.02 per unit of risk. If you would invest 4,363 in Benchmark Electronics on October 20, 2024 and sell it today you would earn a total of 177.00 from holding Benchmark Electronics or generate 4.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.12% |
| Values | Daily Returns |
Benchmark Electronics vs. Dow Jones Industrial
Performance |
| Timeline |
Benchmark Electronics and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Benchmark Electronics
Pair trading matchups for Benchmark Electronics
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Benchmark Electronics and Dow Jones
The main advantage of trading using opposite Benchmark Electronics and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Benchmark Electronics position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Benchmark Electronics vs. Marie Brizard Wine | Benchmark Electronics vs. Virtus Investment Partners | Benchmark Electronics vs. TRAINLINE PLC LS | Benchmark Electronics vs. MidCap Financial Investment |
| Dow Jones vs. Aluminum of | Dow Jones vs. Adtalem Global Education | Dow Jones vs. East Africa Metals | Dow Jones vs. Western Copper and |
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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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