Correlation Between HITACHI STRMACHADR2 and Methode Electronics
Can any of the company-specific risk be diversified away by investing in both HITACHI STRMACHADR2 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 HITACHI STRMACHADR2 and Methode Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HITACHI STRMACHADR2 and Methode Electronics, you can compare the effects of market volatilities on HITACHI STRMACHADR2 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 HITACHI STRMACHADR2 with a short position of Methode Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of HITACHI STRMACHADR2 and Methode Electronics.
Diversification Opportunities for HITACHI STRMACHADR2 and Methode Electronics
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between HITACHI and Methode is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding HITACHI STRMACHADR2 and Methode Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Methode Electronics and HITACHI STRMACHADR2 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 HITACHI STRMACHADR2 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 HITACHI STRMACHADR2 i.e., HITACHI STRMACHADR2 and Methode Electronics go up and down completely randomly.
Pair Corralation between HITACHI STRMACHADR2 and Methode Electronics
Assuming the 90 days trading horizon HITACHI STRMACHADR2 is expected to generate 0.47 times more return on investment than Methode Electronics. However, HITACHI STRMACHADR2 is 2.13 times less risky than Methode Electronics. It trades about 0.0 of its potential returns per unit of risk. Methode Electronics is currently generating about -0.05 per unit of risk. If you would invest 4,430 in HITACHI STRMACHADR2 on August 29, 2024 and sell it today you would lose (330.00) from holding HITACHI STRMACHADR2 or give up 7.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HITACHI STRMACHADR2 vs. Methode Electronics
Performance |
| Timeline |
| HITACHI STRMACHADR2 |
| Methode Electronics |
HITACHI STRMACHADR2 and Methode Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HITACHI STRMACHADR2 and Methode Electronics
The main advantage of trading using opposite HITACHI STRMACHADR2 and Methode Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HITACHI STRMACHADR2 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.| HITACHI STRMACHADR2 vs. Superior Plus Corp | HITACHI STRMACHADR2 vs. NMI Holdings | HITACHI STRMACHADR2 vs. Origin Agritech | HITACHI STRMACHADR2 vs. SIVERS SEMICONDUCTORS AB |
| 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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