Correlation Between Celestica and Benchmark Electronics
Can any of the company-specific risk be diversified away by investing in both Celestica 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 Celestica and Benchmark Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Celestica and Benchmark Electronics, you can compare the effects of market volatilities on Celestica 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 Celestica with a short position of Benchmark Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Celestica and Benchmark Electronics.
Diversification Opportunities for Celestica and Benchmark Electronics
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Celestica and Benchmark is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Celestica and Benchmark Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Benchmark Electronics and Celestica 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 Celestica 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 Celestica i.e., Celestica and Benchmark Electronics go up and down completely randomly.
Pair Corralation between Celestica and Benchmark Electronics
Considering the 90-day investment horizon Celestica is expected to generate 1.89 times more return on investment than Benchmark Electronics. However, Celestica is 1.89 times more volatile than Benchmark Electronics. It trades about 0.19 of its potential returns per unit of risk. Benchmark Electronics is currently generating about 0.24 per unit of risk. If you would invest 4,690 in Celestica on March 7, 2024 and sell it today you would earn a total of 581.00 from holding Celestica or generate 12.39% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Celestica vs. Benchmark Electronics
Performance |
Timeline |
Celestica |
Benchmark Electronics |
Celestica and Benchmark Electronics Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Celestica and Benchmark Electronics
The main advantage of trading using opposite Celestica and Benchmark Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Celestica 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.Celestica vs. Richardson Electronics | Celestica vs. Interlink Electronics | Celestica vs. SigmaTron International | Celestica vs. Maris Tech |
Benchmark Electronics vs. Richardson Electronics | Benchmark Electronics vs. Interlink Electronics | Benchmark Electronics vs. SigmaTron International | Benchmark Electronics vs. Maris Tech |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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