Correlation Between Bel Fuse and Benchmark Electronics

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

By analyzing existing cross correlation between Bel Fuse B and Benchmark Electronics, you can compare the effects of market volatilities on Bel Fuse 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 Bel Fuse with a short position of Benchmark Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bel Fuse and Benchmark Electronics.

Diversification Opportunities for Bel Fuse and Benchmark Electronics

-0.03

Correlation Coefficient

Bel Fuse  Benchmark Electronics

Good diversification

The 3 months correlation between Bel and Benchmark is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Bel Fuse B and Benchmark Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Benchmark Electronics and Bel Fuse 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 Bel Fuse B 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 Bel Fuse i.e., Bel Fuse and Benchmark Electronics go up and down completely randomly.

Pair Corralation between Bel Fuse and Benchmark Electronics

Assuming the 90 days horizon Bel Fuse B is expected to generate 1.29 times more return on investment than Benchmark Electronics. However, Bel Fuse is 1.29 times more volatile than Benchmark Electronics. It trades about 0.07 of its potential returns per unit of risk. Benchmark Electronics is currently generating about -0.26 per unit of risk. If you would invest  8,090  in Bel Fuse B on November 28, 2024 and sell it today you would earn a total of  209.00  from holding Bel Fuse B or generate 2.58% return on investment over 90 days.

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

Bel Fuse B  vs.  Benchmark Electronics

Bel Fuse B

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bel Fuse B are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Bel Fuse is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Benchmark Electronics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Benchmark Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Bel Fuse and Benchmark Electronics

The main advantage of trading using opposite Bel Fuse and Benchmark Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bel Fuse 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.

The idea behind Bel Fuse B and Benchmark Electronics 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.