Correlation Between Celestica and Richardson Electronics
Can any of the company-specific risk be diversified away by investing in both Celestica and Richardson Electronics 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 Celestica and Richardson Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Celestica and Richardson Electronics, you can compare the effects of market volatilities on Celestica and Richardson Electronics 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 Celestica with a short position of Richardson Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Celestica and Richardson Electronics.
Diversification Opportunities for Celestica and Richardson Electronics
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Celestica and Richardson is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Celestica and Richardson Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Richardson Electronics and Celestica 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 Celestica are associated (or correlated) with Richardson Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Richardson Electronics has no effect on the direction of Celestica i.e., Celestica and Richardson Electronics go up and down completely randomly.
Pair Corralation between Celestica and Richardson Electronics
Considering the 90-day investment horizon Celestica is expected to generate 2.19 times more return on investment than Richardson Electronics. However, Celestica is 2.19 times more volatile than Richardson Electronics. It trades about 0.2 of its potential returns per unit of risk. Richardson Electronics is currently generating about -0.09 per unit of risk. If you would invest 9,692 in Celestica on November 4, 2024 and sell it today you would earn a total of 2,655 from holding Celestica or generate 27.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Celestica vs. Richardson Electronics
Performance |
| Timeline |
| Celestica |
| Richardson Electronics |
Celestica and Richardson Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Celestica and Richardson Electronics
The main advantage of trading using opposite Celestica and Richardson Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Celestica position performs unexpectedly, Richardson Electronics 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 Richardson Electronics will offset losses from the drop in Richardson Electronics' long position.| Celestica vs. Plexus Corp | Celestica vs. Benchmark Electronics | Celestica vs. Flex | Celestica vs. Jabil Circuit |
| Richardson Electronics vs. Bel Fuse A | Richardson Electronics vs. LSI Industries | Richardson Electronics vs. Benchmark Electronics | Richardson Electronics vs. Plexus Corp |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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