Correlation Between Methode Electronics and American Public
Can any of the company-specific risk be diversified away by investing in both Methode Electronics and American Public 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 Methode Electronics and American Public into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Methode Electronics and American Public Education, you can compare the effects of market volatilities on Methode Electronics and American Public 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 Methode Electronics with a short position of American Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of Methode Electronics and American Public.
Diversification Opportunities for Methode Electronics and American Public
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Methode and American is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Methode Electronics and American Public Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Public Education and Methode Electronics 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 Methode Electronics are associated (or correlated) with American Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Public Education has no effect on the direction of Methode Electronics i.e., Methode Electronics and American Public go up and down completely randomly.
Pair Corralation between Methode Electronics and American Public
Assuming the 90 days trading horizon Methode Electronics is expected to under-perform the American Public. But the stock apears to be less risky and, when comparing its historical volatility, Methode Electronics is 1.1 times less risky than American Public. The stock trades about -0.06 of its potential returns per unit of risk. The American Public Education is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 444.00 in American Public Education on September 4, 2024 and sell it today you would earn a total of 1,516 from holding American Public Education or generate 341.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.74% |
| Values | Daily Returns |
Methode Electronics vs. American Public Education
Performance |
| Timeline |
| Methode Electronics |
| American Public Education |
Methode Electronics and American Public Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Methode Electronics and American Public
The main advantage of trading using opposite Methode Electronics and American Public positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Methode Electronics position performs unexpectedly, American Public 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 American Public will offset losses from the drop in American Public's long position.| Methode Electronics vs. Performance Food Group | Methode Electronics vs. CN MODERN DAIRY | Methode Electronics vs. PT Indofood Sukses | Methode Electronics vs. Astral Foods Limited |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
Other Complementary Tools
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Equity Valuation Check real value of public entities based on technical and fundamental data |