Correlation Between Belden and Amphenol

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Can any of the company-specific risk be diversified away by investing in both Belden and Amphenol 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 Belden and Amphenol into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Belden Inc and Amphenol, you can compare the effects of market volatilities on Belden and Amphenol 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 Belden with a short position of Amphenol. Check out your portfolio center. Please also check ongoing floating volatility patterns of Belden and Amphenol.

Diversification Opportunities for Belden and Amphenol

0.93
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Belden and Amphenol is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Belden Inc and Amphenol in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amphenol and Belden 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 Belden Inc are associated (or correlated) with Amphenol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amphenol has no effect on the direction of Belden i.e., Belden and Amphenol go up and down completely randomly.

Pair Corralation between Belden and Amphenol

Considering the 90-day investment horizon Belden Inc is expected to generate 1.26 times more return on investment than Amphenol. However, Belden is 1.26 times more volatile than Amphenol. It trades about 0.4 of its potential returns per unit of risk. Amphenol is currently generating about 0.32 per unit of risk. If you would invest  8,383  in Belden Inc on December 29, 2023 and sell it today you would earn a total of  938.00  from holding Belden Inc or generate 11.19% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Belden Inc  vs.  Amphenol

 Performance 
       Timeline  
Belden Inc 

Risk-Adjusted Performance

11 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Belden Inc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Belden exhibited solid returns over the last few months and may actually be approaching a breakup point.
Amphenol 

Risk-Adjusted Performance

18 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Amphenol are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Amphenol demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Belden and Amphenol Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Belden and Amphenol

The main advantage of trading using opposite Belden and Amphenol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Belden position performs unexpectedly, Amphenol 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 Amphenol will offset losses from the drop in Amphenol's long position.
The idea behind Belden Inc and Amphenol pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.

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