Correlation Between REVO INSURANCE and Methode Electronics
Can any of the company-specific risk be diversified away by investing in both REVO INSURANCE 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 REVO INSURANCE and Methode Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between REVO INSURANCE SPA and Methode Electronics, you can compare the effects of market volatilities on REVO INSURANCE 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 REVO INSURANCE with a short position of Methode Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of REVO INSURANCE and Methode Electronics.
Diversification Opportunities for REVO INSURANCE and Methode Electronics
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between REVO and Methode is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding REVO INSURANCE SPA and Methode Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Methode Electronics and REVO INSURANCE 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 REVO INSURANCE SPA 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 REVO INSURANCE i.e., REVO INSURANCE and Methode Electronics go up and down completely randomly.
Pair Corralation between REVO INSURANCE and Methode Electronics
Assuming the 90 days horizon REVO INSURANCE is expected to generate 1.87 times less return on investment than Methode Electronics. But when comparing it to its historical volatility, REVO INSURANCE SPA is 3.52 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 0.08 of returns per unit of risk over similar time horizon. If you would invest 840.00 in Methode Electronics on August 29, 2024 and sell it today you would earn a total of 55.00 from holding Methode Electronics or generate 6.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
REVO INSURANCE SPA vs. Methode Electronics
Performance |
| Timeline |
| REVO INSURANCE SPA |
| Methode Electronics |
REVO INSURANCE and Methode Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with REVO INSURANCE and Methode Electronics
The main advantage of trading using opposite REVO INSURANCE and Methode Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if REVO INSURANCE 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.| REVO INSURANCE vs. Ares Management Corp | REVO INSURANCE vs. Southwest Airlines Co | REVO INSURANCE vs. Jupiter Fund Management | REVO INSURANCE vs. Perdoceo Education |
| Methode Electronics vs. ALGOMA STEEL GROUP | Methode Electronics vs. LEGACY IRON ORE | Methode Electronics vs. NEWELL RUBBERMAID | Methode Electronics vs. Sumitomo Rubber Industries |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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