Correlation Between Interlink Electronics and Benchmark Electronics
Can any of the company-specific risk be diversified away by investing in both Interlink Electronics 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 Interlink Electronics and Benchmark Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Interlink Electronics and Benchmark Electronics, you can compare the effects of market volatilities on Interlink Electronics 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 Interlink Electronics with a short position of Benchmark Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Interlink Electronics and Benchmark Electronics.
Diversification Opportunities for Interlink Electronics and Benchmark Electronics
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Interlink and Benchmark is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Interlink Electronics and Benchmark Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Benchmark Electronics and Interlink Electronics 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 Interlink Electronics 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 Interlink Electronics i.e., Interlink Electronics and Benchmark Electronics go up and down completely randomly.
Pair Corralation between Interlink Electronics and Benchmark Electronics
Given the investment horizon of 90 days Interlink Electronics is expected to generate 3.87 times more return on investment than Benchmark Electronics. However, Interlink Electronics is 3.87 times more volatile than Benchmark Electronics. It trades about 0.29 of its potential returns per unit of risk. Benchmark Electronics is currently generating about -0.12 per unit of risk. If you would invest 612.00 in Interlink Electronics on November 3, 2024 and sell it today you would earn a total of 351.00 from holding Interlink Electronics or generate 57.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Interlink Electronics vs. Benchmark Electronics
Performance |
| Timeline |
| Interlink Electronics |
| Benchmark Electronics |
Interlink Electronics and Benchmark Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Interlink Electronics and Benchmark Electronics
The main advantage of trading using opposite Interlink Electronics and Benchmark Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Interlink Electronics 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.| Interlink Electronics vs. Methode Electronics | Interlink Electronics vs. Bel Fuse A | Interlink Electronics vs. CTS Corporation | Interlink Electronics vs. MicroCloud Hologram |
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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.
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