Correlation Between Allied Motion and Methode Electronics
Can any of the company-specific risk be diversified away by investing in both Allied Motion 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 Allied Motion and Methode Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Allied Motion Technologies and Methode Electronics, you can compare the effects of market volatilities on Allied Motion 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 Allied Motion with a short position of Methode Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allied Motion and Methode Electronics.
Diversification Opportunities for Allied Motion and Methode Electronics
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Allied and Methode is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Allied Motion Technologies and Methode Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Methode Electronics and Allied Motion 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 Allied Motion Technologies 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 Allied Motion i.e., Allied Motion and Methode Electronics go up and down completely randomly.
Pair Corralation between Allied Motion and Methode Electronics
If you would invest 1,177 in Methode Electronics on October 25, 2024 and sell it today you would earn a total of 124.00 from holding Methode Electronics or generate 10.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 5.26% |
| Values | Daily Returns |
Allied Motion Technologies vs. Methode Electronics
Performance |
| Timeline |
| Allied Motion Techno |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Methode Electronics |
Allied Motion and Methode Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allied Motion and Methode Electronics
The main advantage of trading using opposite Allied Motion and Methode Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allied Motion 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.| Allied Motion vs. Plexus Corp | Allied Motion vs. Sanmina | Allied Motion vs. Bel Fuse A | Allied Motion vs. Methode Electronics |
| Methode Electronics vs. Sanmina | Methode Electronics vs. Benchmark Electronics | Methode Electronics vs. OSI Systems | Methode Electronics vs. Celestica |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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