Correlation Between Flex and Benchmark Electronics
Can any of the company-specific risk be diversified away by investing in both Flex and Benchmark 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 Flex and Benchmark Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flex and Benchmark Electronics, you can compare the effects of market volatilities on Flex and Benchmark 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 Flex with a short position of Benchmark Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flex and Benchmark Electronics.
Diversification Opportunities for Flex and Benchmark Electronics
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Flex and Benchmark is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Flex and Benchmark Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Benchmark Electronics and Flex 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 Flex are associated (or correlated) with Benchmark Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Benchmark Electronics has no effect on the direction of Flex i.e., Flex and Benchmark Electronics go up and down completely randomly.
Pair Corralation between Flex and Benchmark Electronics
Given the investment horizon of 90 days Flex is expected to generate 0.87 times more return on investment than Benchmark Electronics. However, Flex is 1.15 times less risky than Benchmark Electronics. It trades about 0.28 of its potential returns per unit of risk. Benchmark Electronics is currently generating about 0.12 per unit of risk. If you would invest 3,525 in Flex on August 27, 2024 and sell it today you would earn a total of 582.00 from holding Flex or generate 16.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flex vs. Benchmark Electronics
Performance |
| Timeline |
| Flex |
| Benchmark Electronics |
Flex and Benchmark Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flex and Benchmark Electronics
The main advantage of trading using opposite Flex and Benchmark Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flex position performs unexpectedly, Benchmark 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 Benchmark Electronics will offset losses from the drop in Benchmark Electronics' long position.The idea behind Flex and Benchmark Electronics 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.| Benchmark Electronics vs. Plexus Corp | Benchmark Electronics vs. Jabil Circuit | Benchmark Electronics vs. Sanmina | Benchmark Electronics vs. Methode 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
Other Complementary Tools
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. |