Correlation Between METHODE ELECTRONICS and ALGOMA STEEL
Can any of the company-specific risk be diversified away by investing in both METHODE ELECTRONICS and ALGOMA STEEL 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 ALGOMA STEEL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between METHODE ELECTRONICS and ALGOMA STEEL GROUP, you can compare the effects of market volatilities on METHODE ELECTRONICS and ALGOMA STEEL 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 ALGOMA STEEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of METHODE ELECTRONICS and ALGOMA STEEL.
Diversification Opportunities for METHODE ELECTRONICS and ALGOMA STEEL
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between METHODE and ALGOMA is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding METHODE ELECTRONICS and ALGOMA STEEL GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALGOMA STEEL GROUP 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 ALGOMA STEEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALGOMA STEEL GROUP has no effect on the direction of METHODE ELECTRONICS i.e., METHODE ELECTRONICS and ALGOMA STEEL go up and down completely randomly.
Pair Corralation between METHODE ELECTRONICS and ALGOMA STEEL
Assuming the 90 days trading horizon METHODE ELECTRONICS is expected to under-perform the ALGOMA STEEL. In addition to that, METHODE ELECTRONICS is 1.65 times more volatile than ALGOMA STEEL GROUP. It trades about -0.04 of its total potential returns per unit of risk. ALGOMA STEEL GROUP is currently generating about 0.06 per unit of volatility. If you would invest 559.00 in ALGOMA STEEL GROUP on September 12, 2024 and sell it today you would earn a total of 396.00 from holding ALGOMA STEEL GROUP or generate 70.84% 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. ALGOMA STEEL GROUP
Performance |
| Timeline |
| METHODE ELECTRONICS |
| ALGOMA STEEL GROUP |
METHODE ELECTRONICS and ALGOMA STEEL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with METHODE ELECTRONICS and ALGOMA STEEL
The main advantage of trading using opposite METHODE ELECTRONICS and ALGOMA STEEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if METHODE ELECTRONICS position performs unexpectedly, ALGOMA STEEL 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 ALGOMA STEEL will offset losses from the drop in ALGOMA STEEL's long position.| METHODE ELECTRONICS vs. Apple Inc | METHODE ELECTRONICS vs. Apple Inc | METHODE ELECTRONICS vs. Apple Inc | METHODE ELECTRONICS vs. Apple Inc |
| ALGOMA STEEL vs. ArcelorMittal | ALGOMA STEEL vs. NIPPON STEEL SPADR | ALGOMA STEEL vs. Reliance Steel Aluminum | ALGOMA STEEL vs. Superior Plus Corp |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges |