Correlation Between CTS and Plexus Corp
Can any of the company-specific risk be diversified away by investing in both CTS and Plexus Corp 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 Plexus Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CTS Corporation and Plexus Corp, you can compare the effects of market volatilities on CTS and Plexus Corp 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 Plexus Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of CTS and Plexus Corp.
Diversification Opportunities for CTS and Plexus Corp
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between CTS and Plexus is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding CTS Corp. and Plexus Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plexus Corp 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 Plexus Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plexus Corp has no effect on the direction of CTS i.e., CTS and Plexus Corp go up and down completely randomly.
Pair Corralation between CTS and Plexus Corp
Considering the 90-day investment horizon CTS is expected to generate 1.3 times less return on investment than Plexus Corp. In addition to that, CTS is 1.05 times more volatile than Plexus Corp. It trades about 0.19 of its total potential returns per unit of risk. Plexus Corp is currently generating about 0.26 per unit of volatility. If you would invest 13,557 in Plexus Corp on August 24, 2024 and sell it today you would earn a total of 2,406 from holding Plexus Corp or generate 17.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
CTS Corp. vs. Plexus Corp
Performance |
| Timeline |
| CTS Corporation |
| Plexus Corp |
CTS and Plexus Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CTS and Plexus Corp
The main advantage of trading using opposite CTS and Plexus Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CTS position performs unexpectedly, Plexus Corp 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 Plexus Corp will offset losses from the drop in Plexus Corp's long position.The idea behind CTS Corporation and Plexus Corp 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.| Plexus Corp vs. Celestica | Plexus Corp vs. Benchmark Electronics | Plexus Corp vs. Flex | Plexus Corp 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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