Correlation Between Media and Methode Electronics
Can any of the company-specific risk be diversified away by investing in both Media 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 Media and Methode Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Media and Games and Methode Electronics, you can compare the effects of market volatilities on Media 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 Media with a short position of Methode Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Media and Methode Electronics.
Diversification Opportunities for Media and Methode Electronics
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Media and Methode is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Media and Games and Methode Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Methode Electronics and Media 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 Media and Games 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 Media i.e., Media and Methode Electronics go up and down completely randomly.
Pair Corralation between Media and Methode Electronics
Assuming the 90 days trading horizon Media and Games is expected to generate 1.05 times more return on investment than Methode Electronics. However, Media is 1.05 times more volatile than Methode Electronics. It trades about 0.24 of its potential returns per unit of risk. Methode Electronics is currently generating about -0.05 per unit of risk. If you would invest 314.00 in Media and Games on November 30, 2024 and sell it today you would earn a total of 62.00 from holding Media and Games or generate 19.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Media and Games vs. Methode Electronics
Performance |
| Timeline |
| Media and Games |
| Methode Electronics |
Media and Methode Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Media and Methode Electronics
The main advantage of trading using opposite Media and Methode Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Media 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.| Media vs. TELECOM PLUS | Media vs. FARO TECHNOLOGIES | Media vs. Allegheny Technologies Incorporated | Media vs. Agilent Technologies |
| Methode Electronics vs. Major Drilling Group | Methode Electronics vs. RCI Hospitality Holdings | Methode Electronics vs. National Health Investors | Methode Electronics vs. Cardinal Health |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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