Correlation Between Scientific Games and Benchmark Electronics
Can any of the company-specific risk be diversified away by investing in both Scientific Games 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 Scientific Games and Benchmark Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scientific Games and Benchmark Electronics, you can compare the effects of market volatilities on Scientific Games 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 Scientific Games with a short position of Benchmark Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scientific Games and Benchmark Electronics.
Diversification Opportunities for Scientific Games and Benchmark Electronics
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Scientific and Benchmark is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Scientific Games and Benchmark Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Benchmark Electronics and Scientific Games 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 Scientific Games 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 Scientific Games i.e., Scientific Games and Benchmark Electronics go up and down completely randomly.
Pair Corralation between Scientific Games and Benchmark Electronics
Assuming the 90 days horizon Scientific Games is expected to generate 1.35 times less return on investment than Benchmark Electronics. But when comparing it to its historical volatility, Scientific Games is 1.11 times less risky than Benchmark Electronics. It trades about 0.05 of its potential returns per unit of risk. Benchmark Electronics is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,586 in Benchmark Electronics on August 25, 2024 and sell it today you would earn a total of 1,834 from holding Benchmark Electronics or generate 70.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scientific Games vs. Benchmark Electronics
Performance |
| Timeline |
| Scientific Games |
| Benchmark Electronics |
Scientific Games and Benchmark Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scientific Games and Benchmark Electronics
The main advantage of trading using opposite Scientific Games and Benchmark Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scientific Games 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.| Scientific Games vs. Apple Inc | Scientific Games vs. Apple Inc | Scientific Games vs. Apple Inc | Scientific Games vs. Apple Inc |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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