Correlation Between Benchmark Electronics and Carsales
Can any of the company-specific risk be diversified away by investing in both Benchmark Electronics and Carsales 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 Carsales into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Benchmark Electronics and Carsales, you can compare the effects of market volatilities on Benchmark Electronics and Carsales 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 Carsales. Check out your portfolio center. Please also check ongoing floating volatility patterns of Benchmark Electronics and Carsales.
Diversification Opportunities for Benchmark Electronics and Carsales
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Benchmark and Carsales is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Benchmark Electronics and Carsales in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carsales 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 Carsales. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carsales has no effect on the direction of Benchmark Electronics i.e., Benchmark Electronics and Carsales go up and down completely randomly.
Pair Corralation between Benchmark Electronics and Carsales
Assuming the 90 days horizon Benchmark Electronics is expected to generate 3.79 times less return on investment than Carsales. But when comparing it to its historical volatility, Benchmark Electronics is 1.38 times less risky than Carsales. It trades about 0.08 of its potential returns per unit of risk. Carsales is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 2,180 in Carsales on October 29, 2024 and sell it today you would earn a total of 200.00 from holding Carsales or generate 9.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Benchmark Electronics vs. Carsales
Performance |
| Timeline |
| Benchmark Electronics |
| Carsales |
Benchmark Electronics and Carsales Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Benchmark Electronics and Carsales
The main advantage of trading using opposite Benchmark Electronics and Carsales positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Benchmark Electronics position performs unexpectedly, Carsales 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 Carsales will offset losses from the drop in Carsales' long position.| Benchmark Electronics vs. Corporate Travel Management | Benchmark Electronics vs. Treasury Wine Estates | Benchmark Electronics vs. Q2M Managementberatung AG | Benchmark Electronics vs. Carsales |
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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