Correlation Between Benchmark Electronics and TRAVEL +
Can any of the company-specific risk be diversified away by investing in both Benchmark Electronics and TRAVEL + 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 TRAVEL + into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Benchmark Electronics and TRAVEL LEISURE DL 01, you can compare the effects of market volatilities on Benchmark Electronics and TRAVEL + 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 TRAVEL +. Check out your portfolio center. Please also check ongoing floating volatility patterns of Benchmark Electronics and TRAVEL +.
Diversification Opportunities for Benchmark Electronics and TRAVEL +
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Benchmark and TRAVEL is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Benchmark Electronics and TRAVEL LEISURE DL 01 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRAVEL LEISURE DL 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 TRAVEL +. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRAVEL LEISURE DL has no effect on the direction of Benchmark Electronics i.e., Benchmark Electronics and TRAVEL + go up and down completely randomly.
Pair Corralation between Benchmark Electronics and TRAVEL +
Assuming the 90 days horizon Benchmark Electronics is expected to generate 1.37 times less return on investment than TRAVEL +. In addition to that, Benchmark Electronics is 1.9 times more volatile than TRAVEL LEISURE DL 01. It trades about 0.2 of its total potential returns per unit of risk. TRAVEL LEISURE DL 01 is currently generating about 0.51 per unit of volatility. If you would invest 4,360 in TRAVEL LEISURE DL 01 on September 2, 2024 and sell it today you would earn a total of 890.00 from holding TRAVEL LEISURE DL 01 or generate 20.41% 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. TRAVEL LEISURE DL 01
Performance |
| Timeline |
| Benchmark Electronics |
| TRAVEL LEISURE DL |
Benchmark Electronics and TRAVEL + Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Benchmark Electronics and TRAVEL +
The main advantage of trading using opposite Benchmark Electronics and TRAVEL + positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Benchmark Electronics position performs unexpectedly, TRAVEL + 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 TRAVEL + will offset losses from the drop in TRAVEL +'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 |
| TRAVEL + vs. SENECA FOODS A | TRAVEL + vs. Meiko Electronics Co | TRAVEL + vs. Benchmark Electronics | TRAVEL + vs. ARROW ELECTRONICS |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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