Correlation Between CTS and Belden

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

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

Diversification Opportunities for CTS and Belden

0.84

Correlation Coefficient

CTS  Belden

Very poor diversification

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

Pair Corralation between CTS and Belden

Considering the 90-day investment horizon CTS Corporation is expected to under-perform the Belden. But the stock apears to be less risky and, when comparing its historical volatility, CTS Corporation is 1.1 times less risky than Belden. The stock trades about -0.21 of its potential returns per unit of risk. The Belden Inc is currently generating about -0.08 of returns per unit of risk over similar time horizon. 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

CTS Corp.  vs.  Belden Inc

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.

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.

Pair Trading with CTS and Belden

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

The idea behind CTS Corporation and Belden Inc 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.