Correlation Between LGL and Bel Fuse
Can any of the company-specific risk be diversified away by investing in both LGL and Bel Fuse 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 LGL and Bel Fuse into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LGL Group and Bel Fuse B, you can compare the effects of market volatilities on LGL and Bel Fuse 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 LGL with a short position of Bel Fuse. Check out your portfolio center. Please also check ongoing floating volatility patterns of LGL and Bel Fuse.
Diversification Opportunities for LGL and Bel Fuse
Modest diversification
The 3 months correlation between LGL and Bel is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding LGL Group and Bel Fuse B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bel Fuse B and LGL 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 LGL Group are associated (or correlated) with Bel Fuse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bel Fuse B has no effect on the direction of LGL i.e., LGL and Bel Fuse go up and down completely randomly.
Pair Corralation between LGL and Bel Fuse
Considering the 90-day investment horizon LGL is expected to generate 6.64 times less return on investment than Bel Fuse. But when comparing it to its historical volatility, LGL Group is 1.24 times less risky than Bel Fuse. It trades about 0.02 of its potential returns per unit of risk. Bel Fuse B is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 7,702 in Bel Fuse B on August 28, 2024 and sell it today you would earn a total of 373.00 from holding Bel Fuse B or generate 4.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LGL Group vs. Bel Fuse B
Performance |
| Timeline |
| LGL Group |
| Bel Fuse B |
LGL and Bel Fuse Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LGL and Bel Fuse
The main advantage of trading using opposite LGL and Bel Fuse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LGL position performs unexpectedly, Bel Fuse 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 Bel Fuse will offset losses from the drop in Bel Fuse's long position.The idea behind LGL Group and Bel Fuse B 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.| Bel Fuse vs. Benchmark Electronics | Bel Fuse vs. Methode Electronics | Bel Fuse vs. Richardson Electronics | Bel Fuse 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
Other Complementary Tools
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |