Correlation Between METHODE ELECTRONICS and H World
Can any of the company-specific risk be diversified away by investing in both METHODE ELECTRONICS and H World 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 H World into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between METHODE ELECTRONICS and H World Group, you can compare the effects of market volatilities on METHODE ELECTRONICS and H World 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 H World. Check out your portfolio center. Please also check ongoing floating volatility patterns of METHODE ELECTRONICS and H World.
Diversification Opportunities for METHODE ELECTRONICS and H World
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between METHODE and CL4A is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding METHODE ELECTRONICS and H World Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on H World 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 H World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of H World Group has no effect on the direction of METHODE ELECTRONICS i.e., METHODE ELECTRONICS and H World go up and down completely randomly.
Pair Corralation between METHODE ELECTRONICS and H World
Assuming the 90 days trading horizon METHODE ELECTRONICS is expected to under-perform the H World. In addition to that, METHODE ELECTRONICS is 1.4 times more volatile than H World Group. It trades about -0.05 of its total potential returns per unit of risk. H World Group is currently generating about -0.01 per unit of volatility. If you would invest 3,904 in H World Group on September 3, 2024 and sell it today you would lose (984.00) from holding H World Group or give up 25.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
METHODE ELECTRONICS vs. H World Group
Performance |
| Timeline |
| METHODE ELECTRONICS |
| H World Group |
METHODE ELECTRONICS and H World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with METHODE ELECTRONICS and H World
The main advantage of trading using opposite METHODE ELECTRONICS and H World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if METHODE ELECTRONICS position performs unexpectedly, H World 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 H World will offset losses from the drop in H World's long position.| METHODE ELECTRONICS vs. TOTAL GABON | METHODE ELECTRONICS vs. Walgreens Boots Alliance | METHODE ELECTRONICS vs. Peak Resources Limited |
| H World vs. Benchmark Electronics | H World vs. Jacquet Metal Service | H World vs. METHODE ELECTRONICS | H World vs. PARKEN Sport Entertainment |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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