Correlation Between Benchmark Electronics and NESTE OYJ
Can any of the company-specific risk be diversified away by investing in both Benchmark Electronics and NESTE OYJ 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 NESTE OYJ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Benchmark Electronics and NESTE OYJ UNSPADR, you can compare the effects of market volatilities on Benchmark Electronics and NESTE OYJ 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 NESTE OYJ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Benchmark Electronics and NESTE OYJ.
Diversification Opportunities for Benchmark Electronics and NESTE OYJ
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Benchmark and NESTE is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Benchmark Electronics and NESTE OYJ UNSPADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NESTE OYJ UNSPADR 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 NESTE OYJ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NESTE OYJ UNSPADR has no effect on the direction of Benchmark Electronics i.e., Benchmark Electronics and NESTE OYJ go up and down completely randomly.
Pair Corralation between Benchmark Electronics and NESTE OYJ
Assuming the 90 days horizon Benchmark Electronics is expected to generate 1.06 times more return on investment than NESTE OYJ. However, Benchmark Electronics is 1.06 times more volatile than NESTE OYJ UNSPADR. It trades about -0.14 of its potential returns per unit of risk. NESTE OYJ UNSPADR is currently generating about -0.26 per unit of risk. If you would invest 3,485 in Benchmark Electronics on January 9, 2025 and sell it today you would lose (425.00) from holding Benchmark Electronics or give up 12.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Benchmark Electronics vs. NESTE OYJ UNSPADR
Performance |
| Timeline |
| Benchmark Electronics |
| NESTE OYJ UNSPADR |
Benchmark Electronics and NESTE OYJ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Benchmark Electronics and NESTE OYJ
The main advantage of trading using opposite Benchmark Electronics and NESTE OYJ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Benchmark Electronics position performs unexpectedly, NESTE OYJ 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 NESTE OYJ will offset losses from the drop in NESTE OYJ's long position.| Benchmark Electronics vs. Jabil Inc | Benchmark Electronics vs. Ibiden CoLtd | Benchmark Electronics vs. Plexus Corp | Benchmark Electronics vs. KCE EL PCL |
| NESTE OYJ vs. Marathon Petroleum Corp | NESTE OYJ vs. Valero Energy | NESTE OYJ vs. Phillips 66 | NESTE OYJ vs. Polski Koncern Naftowy |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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