Correlation Between BRIT AMER and Methode Electronics
Can any of the company-specific risk be diversified away by investing in both BRIT AMER 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 BRIT AMER and Methode Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BRIT AMER TOBACCO and Methode Electronics, you can compare the effects of market volatilities on BRIT AMER 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 BRIT AMER with a short position of Methode Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRIT AMER and Methode Electronics.
Diversification Opportunities for BRIT AMER and Methode Electronics
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BRIT and Methode is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding BRIT AMER TOBACCO and Methode Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Methode Electronics and BRIT AMER 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 BRIT AMER TOBACCO 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 BRIT AMER i.e., BRIT AMER and Methode Electronics go up and down completely randomly.
Pair Corralation between BRIT AMER and Methode Electronics
Assuming the 90 days trading horizon BRIT AMER TOBACCO is expected to generate 0.36 times more return on investment than Methode Electronics. However, BRIT AMER TOBACCO is 2.78 times less risky than Methode Electronics. It trades about 0.31 of its potential returns per unit of risk. Methode Electronics is currently generating about -0.01 per unit of risk. If you would invest 3,556 in BRIT AMER TOBACCO on November 5, 2024 and sell it today you would earn a total of 314.00 from holding BRIT AMER TOBACCO or generate 8.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BRIT AMER TOBACCO vs. Methode Electronics
Performance |
| Timeline |
| BRIT AMER TOBACCO |
| Methode Electronics |
BRIT AMER and Methode Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BRIT AMER and Methode Electronics
The main advantage of trading using opposite BRIT AMER and Methode Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BRIT AMER 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.| BRIT AMER vs. AOYAMA TRADING | BRIT AMER vs. Zijin Mining Group | BRIT AMER vs. SEI INVESTMENTS | BRIT AMER vs. MAGNUM MINING EXP |
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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