Correlation Between TE Connectivity and Benchmark Electronics

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

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

Diversification Opportunities for TE Connectivity and Benchmark Electronics

-0.26

Correlation Coefficient

TE Connectivity  Benchmark Electronics

Very good diversification

The 3 months correlation between TEL and Benchmark is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding TE Connectivity and Benchmark Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Benchmark Electronics and TE Connectivity 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 TE Connectivity 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 TE Connectivity i.e., TE Connectivity and Benchmark Electronics go up and down completely randomly.

Pair Corralation between TE Connectivity and Benchmark Electronics

Considering the 90-day investment horizon TE Connectivity is expected to generate 0.79 times more return on investment than Benchmark Electronics. However, TE Connectivity is 1.27 times less risky than Benchmark Electronics. It trades about 0.03 of its potential returns per unit of risk. Benchmark Electronics is currently generating about -0.11 per unit of risk. If you would invest  14,438  in TE Connectivity on December 27, 2024 and sell it today you would earn a total of  273.00  from holding TE Connectivity or generate 1.89% return on investment over 90 days.

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

TE Connectivity  vs.  Benchmark Electronics

TE Connectivity

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TE Connectivity are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical and fundamental indicators, TE Connectivity is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional 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 April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with TE Connectivity and Benchmark Electronics

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