Correlation Between Benchmark Electronics and UNITED UTILITIES
Can any of the company-specific risk be diversified away by investing in both Benchmark Electronics and UNITED UTILITIES 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 UNITED UTILITIES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Benchmark Electronics and UNITED UTILITIES GR, you can compare the effects of market volatilities on Benchmark Electronics and UNITED UTILITIES 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 UNITED UTILITIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Benchmark Electronics and UNITED UTILITIES.
Diversification Opportunities for Benchmark Electronics and UNITED UTILITIES
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Benchmark and UNITED is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Benchmark Electronics and UNITED UTILITIES GR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNITED UTILITIES 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 UNITED UTILITIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNITED UTILITIES has no effect on the direction of Benchmark Electronics i.e., Benchmark Electronics and UNITED UTILITIES go up and down completely randomly.
Pair Corralation between Benchmark Electronics and UNITED UTILITIES
Assuming the 90 days horizon Benchmark Electronics is expected to under-perform the UNITED UTILITIES. In addition to that, Benchmark Electronics is 1.11 times more volatile than UNITED UTILITIES GR. It trades about -0.23 of its total potential returns per unit of risk. UNITED UTILITIES GR is currently generating about 0.12 per unit of volatility. If you would invest 1,254 in UNITED UTILITIES GR on September 12, 2024 and sell it today you would earn a total of 46.00 from holding UNITED UTILITIES GR or generate 3.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Benchmark Electronics vs. UNITED UTILITIES GR
Performance |
| Timeline |
| Benchmark Electronics |
| UNITED UTILITIES |
Benchmark Electronics and UNITED UTILITIES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Benchmark Electronics and UNITED UTILITIES
The main advantage of trading using opposite Benchmark Electronics and UNITED UTILITIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Benchmark Electronics position performs unexpectedly, UNITED UTILITIES 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 UNITED UTILITIES will offset losses from the drop in UNITED UTILITIES's long position.| Benchmark Electronics vs. Meiko Electronics Co | Benchmark Electronics vs. Superior Plus Corp | Benchmark Electronics vs. SIVERS SEMICONDUCTORS AB | Benchmark Electronics vs. Norsk Hydro ASA |
| UNITED UTILITIES vs. Apple Inc | UNITED UTILITIES vs. Apple Inc | UNITED UTILITIES vs. Apple Inc | UNITED UTILITIES vs. Apple Inc |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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