Correlation Between CTS and Celestica
Can any of the company-specific risk be diversified away by investing in both CTS and Celestica 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 CTS and Celestica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CTS Corporation and Celestica, you can compare the effects of market volatilities on CTS and Celestica 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 CTS with a short position of Celestica. Check out your portfolio center. Please also check ongoing floating volatility patterns of CTS and Celestica.
Diversification Opportunities for CTS and Celestica
Very poor diversification
The 3 months correlation between CTS and Celestica is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding CTS Corp. and Celestica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celestica and CTS 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 CTS Corporation are associated (or correlated) with Celestica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Celestica has no effect on the direction of CTS i.e., CTS and Celestica go up and down completely randomly.
Pair Corralation between CTS and Celestica
Considering the 90-day investment horizon CTS is expected to generate 1.44 times less return on investment than Celestica. In addition to that, CTS is 1.08 times more volatile than Celestica. It trades about 0.21 of its total potential returns per unit of risk. Celestica is currently generating about 0.33 per unit of volatility. If you would invest 7,030 in Celestica on August 28, 2024 and sell it today you would earn a total of 1,530 from holding Celestica or generate 21.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
CTS Corp. vs. Celestica
Performance |
| Timeline |
| CTS Corporation |
| Celestica |
CTS and Celestica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CTS and Celestica
The main advantage of trading using opposite CTS and Celestica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CTS position performs unexpectedly, Celestica 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 Celestica will offset losses from the drop in Celestica's long position.The idea behind CTS Corporation and Celestica pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Celestica vs. Plexus Corp | Celestica vs. Benchmark Electronics | Celestica vs. Flex | Celestica vs. Jabil Circuit |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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