Correlation Between Benchmark Electronics and Amphenol
Can any of the company-specific risk be diversified away by investing in both Benchmark Electronics 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 Benchmark Electronics and Amphenol into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Benchmark Electronics and Amphenol, you can compare the effects of market volatilities on Benchmark Electronics 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 Benchmark Electronics with a short position of Amphenol. Check out your portfolio center. Please also check ongoing floating volatility patterns of Benchmark Electronics and Amphenol.
Diversification Opportunities for Benchmark Electronics and Amphenol
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Benchmark and Amphenol is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Benchmark Electronics and Amphenol in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amphenol and Benchmark Electronics 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 Benchmark Electronics 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 Benchmark Electronics i.e., Benchmark Electronics and Amphenol go up and down completely randomly.
Pair Corralation between Benchmark Electronics and Amphenol
Considering the 90-day investment horizon Benchmark Electronics is expected to generate 1.16 times more return on investment than Amphenol. However, Benchmark Electronics is 1.16 times more volatile than Amphenol. It trades about 0.18 of its potential returns per unit of risk. Amphenol is currently generating about 0.01 per unit of risk. If you would invest 2,897 in Benchmark Electronics on January 24, 2024 and sell it today you would earn a total of 158.00 from holding Benchmark Electronics or generate 5.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Benchmark Electronics vs. Amphenol
Performance |
| Timeline |
| Benchmark Electronics |
| Amphenol |
Benchmark Electronics and Amphenol Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Benchmark Electronics and Amphenol
The main advantage of trading using opposite Benchmark Electronics and Amphenol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Benchmark Electronics 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.| Benchmark Electronics vs. Sanmina | Benchmark Electronics vs. Methode Electronics | Benchmark Electronics vs. OSI Systems | Benchmark Electronics vs. Celestica |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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