Correlation Between Carsales and Benchmark Electronics
Can any of the company-specific risk be diversified away by investing in both Carsales 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 Carsales and Benchmark Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CarsalesCom and Benchmark Electronics, you can compare the effects of market volatilities on Carsales 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 Carsales with a short position of Benchmark Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carsales and Benchmark Electronics.
Diversification Opportunities for Carsales and Benchmark Electronics
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Carsales and Benchmark is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding CarsalesCom and Benchmark Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Benchmark Electronics and Carsales 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 CarsalesCom 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 Carsales i.e., Carsales and Benchmark Electronics go up and down completely randomly.
Pair Corralation between Carsales and Benchmark Electronics
Assuming the 90 days horizon CarsalesCom is expected to generate 0.73 times more return on investment than Benchmark Electronics. However, CarsalesCom is 1.37 times less risky than Benchmark Electronics. It trades about 0.29 of its potential returns per unit of risk. Benchmark Electronics is currently generating about -0.05 per unit of risk. If you would invest 2,160 in CarsalesCom on November 3, 2024 and sell it today you would earn a total of 220.00 from holding CarsalesCom or generate 10.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CarsalesCom vs. Benchmark Electronics
Performance |
| Timeline |
| CarsalesCom |
| Benchmark Electronics |
Carsales and Benchmark Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carsales and Benchmark Electronics
The main advantage of trading using opposite Carsales and Benchmark Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carsales 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.| Carsales vs. T Mobile | Carsales vs. Zoom Video Communications | Carsales vs. SPARTAN STORES | Carsales vs. ecotel communication ag |
| Benchmark Electronics vs. Indutrade AB | Benchmark Electronics vs. SOEDER SPORTFISKE AB | Benchmark Electronics vs. Yuexiu Transport Infrastructure | Benchmark Electronics vs. FLOW TRADERS LTD |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA |