Correlation Between Zimmer Biomet and Benchmark Electronics

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

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

Diversification Opportunities for Zimmer Biomet and Benchmark Electronics

0.0

Correlation Coefficient

Zimmer Biomet  Benchmark Electronics

Pay attention - limited upside

The 3 months correlation between Zimmer and Benchmark is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Zimmer Biomet Holdings and Benchmark Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Benchmark Electronics and Zimmer Biomet 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 Zimmer Biomet Holdings 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 Zimmer Biomet i.e., Zimmer Biomet and Benchmark Electronics go up and down completely randomly.

Pair Corralation between Zimmer Biomet and Benchmark Electronics

If you would invest  0.00  in Zimmer Biomet Holdings on December 23, 2024 and sell it today you would earn a total of  0.00  from holding Zimmer Biomet Holdings or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.64%
Values	Daily Returns

Zimmer Biomet Holdings  vs.  Benchmark Electronics

Zimmer Biomet Holdings

Risk-Adjusted Performance

Weak

Over the last 90 days Zimmer Biomet Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Zimmer Biomet is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private 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. 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 Zimmer Biomet and Benchmark Electronics

The main advantage of trading using opposite Zimmer Biomet and Benchmark Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zimmer Biomet 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 Zimmer Biomet Holdings 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..