Correlation Between TE Connectivity and Littelfuse
Can any of the company-specific risk be diversified away by investing in both TE Connectivity and Littelfuse 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 TE Connectivity and Littelfuse into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TE Connectivity and Littelfuse, you can compare the effects of market volatilities on TE Connectivity and Littelfuse 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 TE Connectivity with a short position of Littelfuse. Check out your portfolio center. Please also check ongoing floating volatility patterns of TE Connectivity and Littelfuse.
Diversification Opportunities for TE Connectivity and Littelfuse
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between TEL and Littelfuse is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding TE Connectivity and Littelfuse in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Littelfuse and TE Connectivity 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 TE Connectivity are associated (or correlated) with Littelfuse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Littelfuse has no effect on the direction of TE Connectivity i.e., TE Connectivity and Littelfuse go up and down completely randomly.
Pair Corralation between TE Connectivity and Littelfuse
Considering the 90-day investment horizon TE Connectivity is expected to generate 0.85 times more return on investment than Littelfuse. However, TE Connectivity is 1.17 times less risky than Littelfuse. It trades about 0.05 of its potential returns per unit of risk. Littelfuse is currently generating about -0.1 per unit of risk. If you would invest 15,022 in TE Connectivity on August 27, 2024 and sell it today you would earn a total of 204.00 from holding TE Connectivity or generate 1.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TE Connectivity vs. Littelfuse
Performance |
| Timeline |
| TE Connectivity |
| Littelfuse |
TE Connectivity and Littelfuse Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TE Connectivity and Littelfuse
The main advantage of trading using opposite TE Connectivity and Littelfuse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TE Connectivity position performs unexpectedly, Littelfuse 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 Littelfuse will offset losses from the drop in Littelfuse's long position.| TE Connectivity vs. Littelfuse | TE Connectivity vs. Fabrinet | TE Connectivity vs. Jabil Circuit | TE Connectivity vs. Sanmina |
| Littelfuse vs. Plexus Corp | Littelfuse vs. Celestica | Littelfuse vs. Benchmark Electronics | Littelfuse vs. Flex |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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