Correlation Between Celestica and Methode Electronics
Can any of the company-specific risk be diversified away by investing in both Celestica 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 Celestica and Methode Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Celestica and Methode Electronics, you can compare the effects of market volatilities on Celestica 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 Celestica with a short position of Methode Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Celestica and Methode Electronics.
Diversification Opportunities for Celestica and Methode Electronics
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Celestica and Methode is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Celestica and Methode Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Methode Electronics and Celestica 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 Celestica 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 Celestica i.e., Celestica and Methode Electronics go up and down completely randomly.
Pair Corralation between Celestica and Methode Electronics
Considering the 90-day investment horizon Celestica is expected to generate 1.14 times more return on investment than Methode Electronics. However, Celestica is 1.14 times more volatile than Methode Electronics. It trades about 0.18 of its potential returns per unit of risk. Methode Electronics is currently generating about 0.13 per unit of risk. If you would invest 7,022 in Celestica on November 1, 2024 and sell it today you would earn a total of 4,393 from holding Celestica or generate 62.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Celestica vs. Methode Electronics
Performance |
| Timeline |
| Celestica |
| Methode Electronics |
Celestica and Methode Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Celestica and Methode Electronics
The main advantage of trading using opposite Celestica and Methode Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Celestica 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.| Celestica vs. Plexus Corp | Celestica vs. Benchmark Electronics | Celestica vs. Flex | Celestica vs. Jabil Circuit |
| 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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