Correlation Between Benchmark Electronics and LG Electronics
Can any of the company-specific risk be diversified away by investing in both Benchmark Electronics and LG 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 LG 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 LG Electronics, you can compare the effects of market volatilities on Benchmark Electronics and LG 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 LG Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Benchmark Electronics and LG Electronics.
Diversification Opportunities for Benchmark Electronics and LG Electronics
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Benchmark and LGLG is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Benchmark Electronics and LG Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Electronics 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 LG Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Electronics has no effect on the direction of Benchmark Electronics i.e., Benchmark Electronics and LG Electronics go up and down completely randomly.
Pair Corralation between Benchmark Electronics and LG Electronics
Assuming the 90 days horizon Benchmark Electronics is expected to generate 1.36 times more return on investment than LG Electronics. However, Benchmark Electronics is 1.36 times more volatile than LG Electronics. It trades about 0.06 of its potential returns per unit of risk. LG Electronics is currently generating about 0.01 per unit of risk. If you would invest 3,906 in Benchmark Electronics on August 30, 2024 and sell it today you would earn a total of 654.00 from holding Benchmark Electronics or generate 16.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Benchmark Electronics vs. LG Electronics
Performance |
| Timeline |
| Benchmark Electronics |
| LG Electronics |
Benchmark Electronics and LG Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Benchmark Electronics and LG Electronics
The main advantage of trading using opposite Benchmark Electronics and LG Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Benchmark Electronics position performs unexpectedly, LG 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 LG Electronics will offset losses from the drop in LG Electronics' 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 |
| LG Electronics vs. Apple Inc | LG Electronics vs. Apple Inc | LG Electronics vs. Apple Inc | LG 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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