Correlation Between Benchmark Electronics and ESSILORLUXOTTICA
Can any of the company-specific risk be diversified away by investing in both Benchmark Electronics and ESSILORLUXOTTICA 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 ESSILORLUXOTTICA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Benchmark Electronics and ESSILORLUXOTTICA 12ON, you can compare the effects of market volatilities on Benchmark Electronics and ESSILORLUXOTTICA 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 ESSILORLUXOTTICA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Benchmark Electronics and ESSILORLUXOTTICA.
Diversification Opportunities for Benchmark Electronics and ESSILORLUXOTTICA
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Benchmark and ESSILORLUXOTTICA is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Benchmark Electronics and ESSILORLUXOTTICA 12ON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ESSILORLUXOTTICA 12ON 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 ESSILORLUXOTTICA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ESSILORLUXOTTICA 12ON has no effect on the direction of Benchmark Electronics i.e., Benchmark Electronics and ESSILORLUXOTTICA go up and down completely randomly.
Pair Corralation between Benchmark Electronics and ESSILORLUXOTTICA
Assuming the 90 days horizon Benchmark Electronics is expected to generate 1.76 times more return on investment than ESSILORLUXOTTICA. However, Benchmark Electronics is 1.76 times more volatile than ESSILORLUXOTTICA 12ON. It trades about 0.06 of its potential returns per unit of risk. ESSILORLUXOTTICA 12ON is currently generating about 0.05 per unit of risk. If you would invest 2,548 in Benchmark Electronics on August 30, 2024 and sell it today you would earn a total of 2,092 from holding Benchmark Electronics or generate 82.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Benchmark Electronics vs. ESSILORLUXOTTICA 12ON
Performance |
| Timeline |
| Benchmark Electronics |
| ESSILORLUXOTTICA 12ON |
Benchmark Electronics and ESSILORLUXOTTICA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Benchmark Electronics and ESSILORLUXOTTICA
The main advantage of trading using opposite Benchmark Electronics and ESSILORLUXOTTICA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Benchmark Electronics position performs unexpectedly, ESSILORLUXOTTICA 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 ESSILORLUXOTTICA will offset losses from the drop in ESSILORLUXOTTICA's long position.| Benchmark Electronics vs. Meiko Electronics Co | Benchmark Electronics vs. Superior Plus Corp | Benchmark Electronics vs. NMI Holdings | Benchmark Electronics vs. SIVERS SEMICONDUCTORS AB |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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