Correlation Between E I and Benson Hill

Can any of the company-specific risk be diversified away by investing in both E I and Benson Hill 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 E I and Benson Hill into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between E I du and Benson Hill, you can compare the effects of market volatilities on E I and Benson Hill 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 E I with a short position of Benson Hill. Check out your portfolio center. Please also check ongoing floating volatility patterns of E I and Benson Hill.

Diversification Opportunities for E I and Benson Hill

-0.27

Correlation Coefficient

E I  Benson Hill

Very good diversification

The 3 months correlation between CTA-PB and Benson is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding E I du and Benson Hill in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Benson Hill and E I 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 E I du are associated (or correlated) with Benson Hill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Benson Hill has no effect on the direction of E I i.e., E I and Benson Hill go up and down completely randomly.

Pair Corralation between E I and Benson Hill

Assuming the 90 days trading horizon E I is expected to generate 18.33 times less return on investment than Benson Hill. But when comparing it to its historical volatility, E I du is 16.46 times less risky than Benson Hill. It trades about 0.07 of its potential returns per unit of risk. Benson Hill is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  19.00  in Benson Hill on February 18, 2024 and sell it today you would earn a total of  4.00  from holding Benson Hill or generate 21.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

E I du  vs.  Benson Hill

E I du

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in E I du are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, E I is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Benson Hill

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Benson Hill are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent forward indicators, Benson Hill disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with E I and Benson Hill

The main advantage of trading using opposite E I and Benson Hill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E I position performs unexpectedly, Benson Hill 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 Benson Hill will offset losses from the drop in Benson Hill's long position.

The idea behind E I du and Benson Hill 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.

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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.