Correlation Between Benchmark Electronics and PLAYTECH
Can any of the company-specific risk be diversified away by investing in both Benchmark Electronics and PLAYTECH 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 PLAYTECH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Benchmark Electronics and PLAYTECH, you can compare the effects of market volatilities on Benchmark Electronics and PLAYTECH 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 PLAYTECH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Benchmark Electronics and PLAYTECH.
Diversification Opportunities for Benchmark Electronics and PLAYTECH
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Benchmark and PLAYTECH is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Benchmark Electronics and PLAYTECH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLAYTECH 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 PLAYTECH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PLAYTECH has no effect on the direction of Benchmark Electronics i.e., Benchmark Electronics and PLAYTECH go up and down completely randomly.
Pair Corralation between Benchmark Electronics and PLAYTECH
Assuming the 90 days horizon Benchmark Electronics is expected to generate 1.06 times more return on investment than PLAYTECH. However, Benchmark Electronics is 1.06 times more volatile than PLAYTECH. It trades about 0.07 of its potential returns per unit of risk. PLAYTECH is currently generating about 0.04 per unit of risk. If you would invest 2,383 in Benchmark Electronics on October 19, 2024 and sell it today you would earn a total of 2,157 from holding Benchmark Electronics or generate 90.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Benchmark Electronics vs. PLAYTECH
Performance |
| Timeline |
| Benchmark Electronics |
| PLAYTECH |
Benchmark Electronics and PLAYTECH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Benchmark Electronics and PLAYTECH
The main advantage of trading using opposite Benchmark Electronics and PLAYTECH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Benchmark Electronics position performs unexpectedly, PLAYTECH 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 PLAYTECH will offset losses from the drop in PLAYTECH's 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 |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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