Correlation Between ITALIAN WINE and Benchmark Electronics
Can any of the company-specific risk be diversified away by investing in both ITALIAN WINE 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 ITALIAN WINE and Benchmark Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ITALIAN WINE BRANDS and Benchmark Electronics, you can compare the effects of market volatilities on ITALIAN WINE 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 ITALIAN WINE with a short position of Benchmark Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of ITALIAN WINE and Benchmark Electronics.
Diversification Opportunities for ITALIAN WINE and Benchmark Electronics
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between ITALIAN and Benchmark is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding ITALIAN WINE BRANDS and Benchmark Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Benchmark Electronics and ITALIAN WINE 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 ITALIAN WINE BRANDS 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 ITALIAN WINE i.e., ITALIAN WINE and Benchmark Electronics go up and down completely randomly.
Pair Corralation between ITALIAN WINE and Benchmark Electronics
Assuming the 90 days horizon ITALIAN WINE BRANDS is expected to under-perform the Benchmark Electronics. But the stock apears to be less risky and, when comparing its historical volatility, ITALIAN WINE BRANDS is 1.14 times less risky than Benchmark Electronics. The stock trades about -0.01 of its potential returns per unit of risk. The Benchmark Electronics is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,498 in Benchmark Electronics on October 13, 2024 and sell it today you would earn a total of 1,962 from holding Benchmark Electronics or generate 78.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
ITALIAN WINE BRANDS vs. Benchmark Electronics
Performance |
| Timeline |
| ITALIAN WINE BRANDS |
| Benchmark Electronics |
ITALIAN WINE and Benchmark Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ITALIAN WINE and Benchmark Electronics
The main advantage of trading using opposite ITALIAN WINE and Benchmark Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ITALIAN WINE 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.| ITALIAN WINE vs. MOVIE GAMES SA | ITALIAN WINE vs. Tianjin Capital Environmental | ITALIAN WINE vs. TOMBADOR IRON LTD | ITALIAN WINE vs. Hochschild Mining plc |
| Benchmark Electronics vs. ITALIAN WINE BRANDS | Benchmark Electronics vs. Sanyo Chemical Industries | Benchmark Electronics vs. HYATT HOTELS A | Benchmark Electronics vs. Mitsubishi Gas Chemical |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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