Correlation Between Benchmark Electronics and Archer Daniels

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

By analyzing existing cross correlation between Benchmark Electronics and Archer Daniels Midland, you can compare the effects of market volatilities on Benchmark Electronics and Archer Daniels 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 Archer Daniels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Benchmark Electronics and Archer Daniels.

Diversification Opportunities for Benchmark Electronics and Archer Daniels

-0.55

Correlation Coefficient

Benchmark Electronics  Archer Daniels

Excellent diversification

The 3 months correlation between Benchmark and Archer is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Benchmark Electronics and Archer Daniels Midland in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Archer Daniels Midland 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 Archer Daniels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Archer Daniels Midland has no effect on the direction of Benchmark Electronics i.e., Benchmark Electronics and Archer Daniels go up and down completely randomly.

Pair Corralation between Benchmark Electronics and Archer Daniels

Assuming the 90 days horizon Benchmark Electronics is expected to generate 1.11 times less return on investment than Archer Daniels. In addition to that, Benchmark Electronics is 1.84 times more volatile than Archer Daniels Midland. It trades about 0.02 of its total potential returns per unit of risk. Archer Daniels Midland is currently generating about 0.04 per unit of volatility. If you would invest  4,823  in Archer Daniels Midland on October 7, 2024 and sell it today you would earn a total of  87.00  from holding Archer Daniels Midland or generate 1.8% 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.  Archer Daniels Midland

Benchmark Electronics

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Benchmark Electronics are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Benchmark Electronics reported solid returns over the last few months and may actually be approaching a breakup point.

Archer Daniels Midland

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Archer Daniels Midland has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Benchmark Electronics and Archer Daniels

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

The idea behind Benchmark Electronics and Archer Daniels Midland 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.