Correlation Between Corning Incorporated and Methode Electronics
Can any of the company-specific risk be diversified away by investing in both Corning Incorporated 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 Corning Incorporated and Methode Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Corning Incorporated and Methode Electronics, you can compare the effects of market volatilities on Corning Incorporated 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 Corning Incorporated with a short position of Methode Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Corning Incorporated and Methode Electronics.
Diversification Opportunities for Corning Incorporated and Methode Electronics
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Corning and Methode is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Corning Incorporated and Methode Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Methode Electronics and Corning Incorporated 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 Corning Incorporated 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 Corning Incorporated i.e., Corning Incorporated and Methode Electronics go up and down completely randomly.
Pair Corralation between Corning Incorporated and Methode Electronics
Assuming the 90 days horizon Corning Incorporated is expected to generate 0.89 times more return on investment than Methode Electronics. However, Corning Incorporated is 1.13 times less risky than Methode Electronics. It trades about 0.07 of its potential returns per unit of risk. Methode Electronics is currently generating about -0.01 per unit of risk. If you would invest 4,600 in Corning Incorporated on November 5, 2024 and sell it today you would earn a total of 161.00 from holding Corning Incorporated or generate 3.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Corning Incorporated vs. Methode Electronics
Performance |
| Timeline |
| Corning Incorporated |
| Methode Electronics |
Corning Incorporated and Methode Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Corning Incorporated and Methode Electronics
The main advantage of trading using opposite Corning Incorporated and Methode Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Corning Incorporated 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.| Corning Incorporated vs. Hollywood Bowl Group | Corning Incorporated vs. GRIFFIN MINING LTD | Corning Incorporated vs. East Africa Metals | Corning Incorporated vs. ZINC MEDIA GR |
| Methode Electronics vs. Transport International Holdings | Methode Electronics vs. Broadcom | Methode Electronics vs. SAFEROADS HLDGS | Methode Electronics vs. Broadridge Financial Solutions |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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