Correlation Between Methode Electronics and COVIVIO HOTELS
Can any of the company-specific risk be diversified away by investing in both Methode Electronics and COVIVIO HOTELS 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 COVIVIO HOTELS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Methode Electronics and COVIVIO HOTELS INH, you can compare the effects of market volatilities on Methode Electronics and COVIVIO HOTELS 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 COVIVIO HOTELS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Methode Electronics and COVIVIO HOTELS.
Diversification Opportunities for Methode Electronics and COVIVIO HOTELS
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Methode and COVIVIO is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Methode Electronics and COVIVIO HOTELS INH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COVIVIO HOTELS INH 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 COVIVIO HOTELS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COVIVIO HOTELS INH has no effect on the direction of Methode Electronics i.e., Methode Electronics and COVIVIO HOTELS go up and down completely randomly.
Pair Corralation between Methode Electronics and COVIVIO HOTELS
Assuming the 90 days trading horizon Methode Electronics is expected to generate 5.34 times more return on investment than COVIVIO HOTELS. However, Methode Electronics is 5.34 times more volatile than COVIVIO HOTELS INH. It trades about 0.11 of its potential returns per unit of risk. COVIVIO HOTELS INH is currently generating about -0.19 per unit of risk. If you would invest 835.00 in Methode Electronics on August 26, 2024 and sell it today you would earn a total of 60.00 from holding Methode Electronics or generate 7.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Methode Electronics vs. COVIVIO HOTELS INH
Performance |
| Timeline |
| Methode Electronics |
| COVIVIO HOTELS INH |
Methode Electronics and COVIVIO HOTELS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Methode Electronics and COVIVIO HOTELS
The main advantage of trading using opposite Methode Electronics and COVIVIO HOTELS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Methode Electronics position performs unexpectedly, COVIVIO HOTELS 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 COVIVIO HOTELS will offset losses from the drop in COVIVIO HOTELS's long position.| Methode Electronics vs. Hon Hai Precision | Methode Electronics vs. Samsung SDI Co | Methode Electronics vs. Mitsubishi Electric | Methode Electronics vs. Sunny Optical Technology |
| COVIVIO HOTELS vs. UET United Electronic | COVIVIO HOTELS vs. Align Technology | COVIVIO HOTELS vs. Micron Technology | COVIVIO HOTELS vs. Methode Electronics |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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