Correlation Between Methode Electronics and PGE
Can any of the company-specific risk be diversified away by investing in both Methode Electronics and PGE 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 PGE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Methode Electronics and PGE Corporation, you can compare the effects of market volatilities on Methode Electronics and PGE 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 PGE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Methode Electronics and PGE.
Diversification Opportunities for Methode Electronics and PGE
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Methode and PGE is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Methode Electronics and PGE Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PGE Corporation 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 PGE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PGE Corporation has no effect on the direction of Methode Electronics i.e., Methode Electronics and PGE go up and down completely randomly.
Pair Corralation between Methode Electronics and PGE
Assuming the 90 days trading horizon Methode Electronics is expected to under-perform the PGE. In addition to that, Methode Electronics is 3.78 times more volatile than PGE Corporation. It trades about -0.02 of its total potential returns per unit of risk. PGE Corporation is currently generating about 0.05 per unit of volatility. If you would invest 1,621 in PGE Corporation on September 14, 2024 and sell it today you would earn a total of 240.00 from holding PGE Corporation or generate 14.81% 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. PGE Corp.
Performance |
| Timeline |
| Methode Electronics |
| PGE Corporation |
Methode Electronics and PGE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Methode Electronics and PGE
The main advantage of trading using opposite Methode Electronics and PGE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Methode Electronics position performs unexpectedly, PGE 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 PGE will offset losses from the drop in PGE's long position.| Methode Electronics vs. Sunny Optical Technology | Methode Electronics vs. Hubbell Incorporated | Methode Electronics vs. TDK Corporation | Methode Electronics vs. Superior Plus Corp |
| PGE vs. Fukuyama Transporting Co | PGE vs. Methode Electronics | PGE vs. Electronic Arts | PGE vs. Benchmark 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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