Correlation Between SIERRA METALS and Methode Electronics
Can any of the company-specific risk be diversified away by investing in both SIERRA METALS 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 SIERRA METALS and Methode Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SIERRA METALS and Methode Electronics, you can compare the effects of market volatilities on SIERRA METALS 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 SIERRA METALS with a short position of Methode Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIERRA METALS and Methode Electronics.
Diversification Opportunities for SIERRA METALS and Methode Electronics
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between SIERRA and Methode is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding SIERRA METALS and Methode Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Methode Electronics and SIERRA METALS 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 SIERRA METALS 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 SIERRA METALS i.e., SIERRA METALS and Methode Electronics go up and down completely randomly.
Pair Corralation between SIERRA METALS and Methode Electronics
Assuming the 90 days trading horizon SIERRA METALS is expected to generate 0.67 times more return on investment than Methode Electronics. However, SIERRA METALS is 1.5 times less risky than Methode Electronics. It trades about 0.16 of its potential returns per unit of risk. Methode Electronics is currently generating about 0.02 per unit of risk. If you would invest 55.00 in SIERRA METALS on October 24, 2024 and sell it today you would earn a total of 3.00 from holding SIERRA METALS or generate 5.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SIERRA METALS vs. Methode Electronics
Performance |
| Timeline |
| SIERRA METALS |
| Methode Electronics |
SIERRA METALS and Methode Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SIERRA METALS and Methode Electronics
The main advantage of trading using opposite SIERRA METALS and Methode Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIERRA METALS 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.| SIERRA METALS vs. MCEWEN MINING INC | SIERRA METALS vs. Universal Display | SIERRA METALS vs. Playa Hotels Resorts | SIERRA METALS vs. ANTA SPORTS PRODUCT |
| Methode Electronics vs. SIERRA METALS | Methode Electronics vs. Aluminum of | Methode Electronics vs. FIREWEED METALS P | Methode Electronics vs. Air Transport Services |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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