Correlation Between Jacquet Metal and Benchmark Electronics

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

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

Diversification Opportunities for Jacquet Metal and Benchmark Electronics

0.08

Correlation Coefficient

Jacquet Metal  Benchmark Electronics

Significant diversification

The 3 months correlation between Jacquet and Benchmark is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Jacquet Metal Service and Benchmark Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Benchmark Electronics and Jacquet Metal 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 Jacquet Metal Service 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 Jacquet Metal i.e., Jacquet Metal and Benchmark Electronics go up and down completely randomly.

Pair Corralation between Jacquet Metal and Benchmark Electronics

Assuming the 90 days horizon Jacquet Metal is expected to generate 1.28 times less return on investment than Benchmark Electronics. But when comparing it to its historical volatility, Jacquet Metal Service is 1.57 times less risky than Benchmark Electronics. It trades about 0.1 of its potential returns per unit of risk. Benchmark Electronics is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  4,024  in Benchmark Electronics on October 13, 2024 and sell it today you would earn a total of  416.00  from holding Benchmark Electronics or generate 10.34% return on investment over 90 days.

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

Jacquet Metal Service  vs.  Benchmark Electronics

Jacquet Metal Service

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jacquet Metal Service are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Jacquet Metal may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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 fragile basic indicators, Benchmark Electronics may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Jacquet Metal and Benchmark Electronics

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

Check out your portfolio center.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.