Correlation Between LUMI GRUPPEN and Methode Electronics
Can any of the company-specific risk be diversified away by investing in both LUMI GRUPPEN and Methode 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 LUMI GRUPPEN and Methode Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LUMI GRUPPEN AS and Methode Electronics, you can compare the effects of market volatilities on LUMI GRUPPEN and Methode 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 LUMI GRUPPEN with a short position of Methode Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of LUMI GRUPPEN and Methode Electronics.
Diversification Opportunities for LUMI GRUPPEN and Methode Electronics
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between LUMI and Methode is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding LUMI GRUPPEN AS and Methode Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Methode Electronics and LUMI GRUPPEN 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 LUMI GRUPPEN AS are associated (or correlated) with Methode Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Methode Electronics has no effect on the direction of LUMI GRUPPEN i.e., LUMI GRUPPEN and Methode Electronics go up and down completely randomly.
Pair Corralation between LUMI GRUPPEN and Methode Electronics
Assuming the 90 days horizon LUMI GRUPPEN AS is expected to generate 1.4 times more return on investment than Methode Electronics. However, LUMI GRUPPEN is 1.4 times more volatile than Methode Electronics. It trades about 0.03 of its potential returns per unit of risk. Methode Electronics is currently generating about -0.04 per unit of risk. If you would invest 97.00 in LUMI GRUPPEN AS on October 12, 2024 and sell it today you would earn a total of 14.00 from holding LUMI GRUPPEN AS or generate 14.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LUMI GRUPPEN AS vs. Methode Electronics
Performance |
| Timeline |
| LUMI GRUPPEN AS |
| Methode Electronics |
LUMI GRUPPEN and Methode Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LUMI GRUPPEN and Methode Electronics
The main advantage of trading using opposite LUMI GRUPPEN and Methode Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LUMI GRUPPEN position performs unexpectedly, Methode 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 Methode Electronics will offset losses from the drop in Methode Electronics' long position.| LUMI GRUPPEN vs. TT Electronics PLC | LUMI GRUPPEN vs. Penta Ocean Construction Co | LUMI GRUPPEN vs. Meiko Electronics Co | LUMI GRUPPEN vs. Daito Trust Construction |
| Methode Electronics vs. PACIFIC ONLINE | Methode Electronics vs. CONTAGIOUS GAMING INC | Methode Electronics vs. PENN NATL GAMING | Methode Electronics vs. SALESFORCE INC CDR |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA |