Correlation Between Benchmark Electronics and Media
Can any of the company-specific risk be diversified away by investing in both Benchmark Electronics and Media 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 Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Benchmark Electronics and Media and Games, you can compare the effects of market volatilities on Benchmark Electronics and Media 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 Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Benchmark Electronics and Media.
Diversification Opportunities for Benchmark Electronics and Media
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Benchmark and Media is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Benchmark Electronics and Media and Games in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Media and Games 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 Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Media and Games has no effect on the direction of Benchmark Electronics i.e., Benchmark Electronics and Media go up and down completely randomly.
Pair Corralation between Benchmark Electronics and Media
Assuming the 90 days horizon Benchmark Electronics is expected to generate 1.34 times less return on investment than Media. But when comparing it to its historical volatility, Benchmark Electronics is 1.07 times less risky than Media. It trades about 0.13 of its potential returns per unit of risk. Media and Games is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 365.00 in Media and Games on August 29, 2024 and sell it today you would earn a total of 44.00 from holding Media and Games or generate 12.05% 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. Media and Games
Performance |
| Timeline |
| Benchmark Electronics |
| Media and Games |
Benchmark Electronics and Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Benchmark Electronics and Media
The main advantage of trading using opposite Benchmark Electronics and Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Benchmark Electronics position performs unexpectedly, Media 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 Media will offset losses from the drop in Media's long position.| Benchmark Electronics vs. Diamyd Medical AB | Benchmark Electronics vs. Aluminum of | Benchmark Electronics vs. Merit Medical Systems | Benchmark Electronics vs. AVITA Medical |
| Media vs. Superior Plus Corp | Media vs. NMI Holdings | Media vs. Origin Agritech | Media vs. SIVERS SEMICONDUCTORS AB |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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