Correlation Between Plexus Corp and Benchmark Electronics

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

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

Diversification Opportunities for Plexus Corp and Benchmark Electronics

0.97

Correlation Coefficient

Plexus Corp  Benchmark Electronics

Almost no diversification

The 3 months correlation between Plexus and Benchmark is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Plexus Corp and Benchmark Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Benchmark Electronics and Plexus Corp 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 Plexus Corp 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 Plexus Corp i.e., Plexus Corp and Benchmark Electronics go up and down completely randomly.

Pair Corralation between Plexus Corp and Benchmark Electronics

Assuming the 90 days horizon Plexus Corp is expected to under-perform the Benchmark Electronics. But the stock apears to be less risky and, when comparing its historical volatility, Plexus Corp is 1.13 times less risky than Benchmark Electronics. The stock trades about -0.18 of its potential returns per unit of risk. The Benchmark Electronics is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest  4,383  in Benchmark Electronics on December 30, 2024 and sell it today you would lose (723.00) from holding Benchmark Electronics or give up 16.5% of portfolio value over 90 days.

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

Plexus Corp  vs.  Benchmark Electronics

Plexus Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Plexus Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Plexus Corp and Benchmark Electronics

The main advantage of trading using opposite Plexus Corp and Benchmark Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Plexus Corp 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 Plexus Corp 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.