Correlation Between Benchmark Electronics and LightPath Technologies
Can any of the company-specific risk be diversified away by investing in both Benchmark Electronics and LightPath Technologies 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 Benchmark Electronics and LightPath Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Benchmark Electronics and LightPath Technologies, you can compare the effects of market volatilities on Benchmark Electronics and LightPath Technologies 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 Benchmark Electronics with a short position of LightPath Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Benchmark Electronics and LightPath Technologies.
Diversification Opportunities for Benchmark Electronics and LightPath Technologies
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Benchmark and LightPath is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Benchmark Electronics and LightPath Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LightPath Technologies and Benchmark Electronics 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 Benchmark Electronics are associated (or correlated) with LightPath Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LightPath Technologies has no effect on the direction of Benchmark Electronics i.e., Benchmark Electronics and LightPath Technologies go up and down completely randomly.
Pair Corralation between Benchmark Electronics and LightPath Technologies
Considering the 90-day investment horizon Benchmark Electronics is expected to generate 5.5 times less return on investment than LightPath Technologies. But when comparing it to its historical volatility, Benchmark Electronics is 1.91 times less risky than LightPath Technologies. It trades about 0.07 of its potential returns per unit of risk. LightPath Technologies is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 200.00 in LightPath Technologies on April 23, 2025 and sell it today you would earn a total of 132.00 from holding LightPath Technologies or generate 66.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Benchmark Electronics vs. LightPath Technologies
Performance |
Timeline |
Benchmark Electronics |
LightPath Technologies |
Benchmark Electronics and LightPath Technologies Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Benchmark Electronics and LightPath Technologies
The main advantage of trading using opposite Benchmark Electronics and LightPath Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Benchmark Electronics position performs unexpectedly, LightPath Technologies 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 LightPath Technologies will offset losses from the drop in LightPath Technologies' long position.Benchmark Electronics vs. Sanmina | Benchmark Electronics vs. Methode Electronics | Benchmark Electronics vs. OSI Systems | Benchmark Electronics vs. Celestica |
LightPath Technologies vs. Methode Electronics | LightPath Technologies vs. OSI Systems | LightPath Technologies vs. Plexus Corp | LightPath Technologies vs. CTS Corporation |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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