Correlation Between Benchmark Electronics and Plexus Corp
Can any of the company-specific risk be diversified away by investing in both Benchmark Electronics and Plexus Corp 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 Plexus Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Benchmark Electronics and Plexus Corp, you can compare the effects of market volatilities on Benchmark Electronics and Plexus Corp 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 Plexus Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Benchmark Electronics and Plexus Corp.
Diversification Opportunities for Benchmark Electronics and Plexus Corp
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Benchmark and Plexus is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Benchmark Electronics and Plexus Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plexus Corp 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 Plexus Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plexus Corp has no effect on the direction of Benchmark Electronics i.e., Benchmark Electronics and Plexus Corp go up and down completely randomly.
Pair Corralation between Benchmark Electronics and Plexus Corp
Assuming the 90 days horizon Benchmark Electronics is expected to generate 1.02 times less return on investment than Plexus Corp. In addition to that, Benchmark Electronics is 1.19 times more volatile than Plexus Corp. It trades about 0.2 of its total potential returns per unit of risk. Plexus Corp is currently generating about 0.24 per unit of volatility. If you would invest 13,300 in Plexus Corp on September 2, 2024 and sell it today you would earn a total of 1,900 from holding Plexus Corp or generate 14.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Benchmark Electronics vs. Plexus Corp
Performance |
| Timeline |
| Benchmark Electronics |
| Plexus Corp |
Benchmark Electronics and Plexus Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Benchmark Electronics and Plexus Corp
The main advantage of trading using opposite Benchmark Electronics and Plexus Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Benchmark Electronics position performs unexpectedly, Plexus Corp 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 Plexus Corp will offset losses from the drop in Plexus Corp's long position.| Benchmark Electronics vs. PennantPark Investment | Benchmark Electronics vs. Japan Asia Investment | Benchmark Electronics vs. UNITED UTILITIES GR | Benchmark Electronics vs. NURAN WIRELESS INC |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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