Correlation Between Benchmark Electronics and Strategic Education
Can any of the company-specific risk be diversified away by investing in both Benchmark Electronics and Strategic Education 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 Strategic Education into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Benchmark Electronics and Strategic Education, you can compare the effects of market volatilities on Benchmark Electronics and Strategic Education 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 Strategic Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Benchmark Electronics and Strategic Education.
Diversification Opportunities for Benchmark Electronics and Strategic Education
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Benchmark and Strategic is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Benchmark Electronics and Strategic Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategic Education 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 Strategic Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategic Education has no effect on the direction of Benchmark Electronics i.e., Benchmark Electronics and Strategic Education go up and down completely randomly.
Pair Corralation between Benchmark Electronics and Strategic Education
Assuming the 90 days horizon Benchmark Electronics is expected to generate 1.15 times more return on investment than Strategic Education. However, Benchmark Electronics is 1.15 times more volatile than Strategic Education. It trades about 0.1 of its potential returns per unit of risk. Strategic Education is currently generating about 0.04 per unit of risk. If you would invest 2,212 in Benchmark Electronics on September 24, 2024 and sell it today you would earn a total of 2,188 from holding Benchmark Electronics or generate 98.92% 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. Strategic Education
Performance |
| Timeline |
| Benchmark Electronics |
| Strategic Education |
Benchmark Electronics and Strategic Education Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Benchmark Electronics and Strategic Education
The main advantage of trading using opposite Benchmark Electronics and Strategic Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Benchmark Electronics position performs unexpectedly, Strategic Education 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 Strategic Education will offset losses from the drop in Strategic Education's long position.| Benchmark Electronics vs. Charoen Pokphand Foods | Benchmark Electronics vs. Jacquet Metal Service | Benchmark Electronics vs. CN MODERN DAIRY | Benchmark Electronics vs. INDOFOOD AGRI RES |
| Strategic Education vs. IDP EDUCATION LTD | Strategic Education vs. TAL Education Group | Strategic Education vs. Grand Canyon Education | Strategic Education vs. Graham Holdings Co |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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