Correlation Between Methode Electronics and SINGAPORE AIRLINES
Can any of the company-specific risk be diversified away by investing in both Methode Electronics and SINGAPORE AIRLINES 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 SINGAPORE AIRLINES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Methode Electronics and SINGAPORE AIRLINES, you can compare the effects of market volatilities on Methode Electronics and SINGAPORE AIRLINES 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 SINGAPORE AIRLINES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Methode Electronics and SINGAPORE AIRLINES.
Diversification Opportunities for Methode Electronics and SINGAPORE AIRLINES
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Methode and SINGAPORE is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Methode Electronics and SINGAPORE AIRLINES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SINGAPORE AIRLINES 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 SINGAPORE AIRLINES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SINGAPORE AIRLINES has no effect on the direction of Methode Electronics i.e., Methode Electronics and SINGAPORE AIRLINES go up and down completely randomly.
Pair Corralation between Methode Electronics and SINGAPORE AIRLINES
Assuming the 90 days trading horizon Methode Electronics is expected to generate 3.74 times more return on investment than SINGAPORE AIRLINES. However, Methode Electronics is 3.74 times more volatile than SINGAPORE AIRLINES. It trades about 0.26 of its potential returns per unit of risk. SINGAPORE AIRLINES is currently generating about 0.04 per unit of risk. If you would invest 815.00 in Methode Electronics on September 4, 2024 and sell it today you would earn a total of 180.00 from holding Methode Electronics or generate 22.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Methode Electronics vs. SINGAPORE AIRLINES
Performance |
| Timeline |
| Methode Electronics |
| SINGAPORE AIRLINES |
Methode Electronics and SINGAPORE AIRLINES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Methode Electronics and SINGAPORE AIRLINES
The main advantage of trading using opposite Methode Electronics and SINGAPORE AIRLINES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Methode Electronics position performs unexpectedly, SINGAPORE AIRLINES 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 SINGAPORE AIRLINES will offset losses from the drop in SINGAPORE AIRLINES'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 |
| SINGAPORE AIRLINES vs. TOTAL GABON | SINGAPORE AIRLINES vs. Walgreens Boots Alliance | SINGAPORE AIRLINES vs. Peak Resources 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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