Correlation Between Bel Fuse and Belden

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

By analyzing existing cross correlation between Bel Fuse B and Belden Inc, you can compare the effects of market volatilities on Bel Fuse and Belden 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 Bel Fuse with a short position of Belden. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bel Fuse and Belden.

Diversification Opportunities for Bel Fuse and Belden

-0.4

Correlation Coefficient

Bel Fuse  Belden

Very good diversification

The 3 months correlation between Bel and Belden is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Bel Fuse B and Belden Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Belden Inc and Bel Fuse 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 Bel Fuse B are associated (or correlated) with Belden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Belden Inc has no effect on the direction of Bel Fuse i.e., Bel Fuse and Belden go up and down completely randomly.

Pair Corralation between Bel Fuse and Belden

Assuming the 90 days horizon Bel Fuse B is expected to under-perform the Belden. But the stock apears to be less risky and, when comparing its historical volatility, Bel Fuse B is 1.32 times less risky than Belden. The stock trades about -0.11 of its potential returns per unit of risk. The Belden Inc is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  8,929  in Belden Inc on February 3, 2024 and sell it today you would lose (106.00) from holding Belden Inc or give up 1.19% of portfolio value over 90 days.

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

Bel Fuse B  vs.  Belden Inc

Bel Fuse B

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bel Fuse B has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Bel Fuse is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Belden Inc

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Belden Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Belden exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bel Fuse and Belden

The main advantage of trading using opposite Bel Fuse and Belden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bel Fuse position performs unexpectedly, Belden 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 Belden will offset losses from the drop in Belden's long position.

The idea behind Bel Fuse B and Belden Inc 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.