Correlation Between Belden and CTS

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

By analyzing existing cross correlation between Belden Inc and CTS Corporation, you can compare the effects of market volatilities on Belden and CTS 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 CTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Belden and CTS.

Diversification Opportunities for Belden and CTS

0.84

Correlation Coefficient

Belden  CTS

Very poor diversification

The 3 months correlation between Belden and CTS is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Belden Inc and CTS Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTS Corporation 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 CTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CTS Corporation has no effect on the direction of Belden i.e., Belden and CTS go up and down completely randomly.

Pair Corralation between Belden and CTS

Considering the 90-day investment horizon Belden Inc is expected to generate 1.1 times more return on investment than CTS. However, Belden is 1.1 times more volatile than CTS Corporation. It trades about -0.08 of its potential returns per unit of risk. CTS Corporation is currently generating about -0.21 per unit of risk. If you would invest  11,532  in Belden Inc on December 26, 2024 and sell it today you would lose (1,017) from holding Belden Inc or give up 8.82% of portfolio value over 90 days.

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

Belden Inc  vs.  CTS Corp.

Belden Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Belden Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

CTS Corporation

Risk-Adjusted Performance

Very Weak

Over the last 90 days CTS Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Belden and CTS

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

The idea behind Belden Inc and CTS Corporation 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.