Correlation Between Benchmark Electronics and Universal Display
Can any of the company-specific risk be diversified away by investing in both Benchmark Electronics and Universal Display 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 Universal Display into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Benchmark Electronics and Universal Display, you can compare the effects of market volatilities on Benchmark Electronics and Universal Display 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 Universal Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of Benchmark Electronics and Universal Display.
Diversification Opportunities for Benchmark Electronics and Universal Display
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Benchmark and Universal is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Benchmark Electronics and Universal Display in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Display 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 Universal Display. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Display has no effect on the direction of Benchmark Electronics i.e., Benchmark Electronics and Universal Display go up and down completely randomly.
Pair Corralation between Benchmark Electronics and Universal Display
Considering the 90-day investment horizon Benchmark Electronics is expected to generate 0.96 times more return on investment than Universal Display. However, Benchmark Electronics is 1.04 times less risky than Universal Display. It trades about 0.13 of its potential returns per unit of risk. Universal Display is currently generating about -0.05 per unit of risk. If you would invest 4,063 in Benchmark Electronics on September 3, 2024 and sell it today you would earn a total of 786.00 from holding Benchmark Electronics or generate 19.35% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Benchmark Electronics vs. Universal Display
Performance |
Timeline |
Benchmark Electronics |
Universal Display |
Benchmark Electronics and Universal Display Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Benchmark Electronics and Universal Display
The main advantage of trading using opposite Benchmark Electronics and Universal Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Benchmark Electronics position performs unexpectedly, Universal Display 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 Universal Display will offset losses from the drop in Universal Display's long position.Benchmark Electronics vs. Celestica | Benchmark Electronics vs. Flex | Benchmark Electronics vs. Jabil Circuit | Benchmark Electronics vs. Sanmina |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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