Correlation Between METHODE ELECTRONICS and STRAYER EDUCATION
Can any of the company-specific risk be diversified away by investing in both METHODE ELECTRONICS and STRAYER EDUCATION 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 STRAYER EDUCATION into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between METHODE ELECTRONICS and STRAYER EDUCATION, you can compare the effects of market volatilities on METHODE ELECTRONICS and STRAYER EDUCATION 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 STRAYER EDUCATION. Check out your portfolio center. Please also check ongoing floating volatility patterns of METHODE ELECTRONICS and STRAYER EDUCATION.
Diversification Opportunities for METHODE ELECTRONICS and STRAYER EDUCATION
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between METHODE and STRAYER is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding METHODE ELECTRONICS and STRAYER EDUCATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STRAYER EDUCATION 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 STRAYER EDUCATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STRAYER EDUCATION has no effect on the direction of METHODE ELECTRONICS i.e., METHODE ELECTRONICS and STRAYER EDUCATION go up and down completely randomly.
Pair Corralation between METHODE ELECTRONICS and STRAYER EDUCATION
Assuming the 90 days trading horizon METHODE ELECTRONICS is expected to under-perform the STRAYER EDUCATION. In addition to that, METHODE ELECTRONICS is 2.18 times more volatile than STRAYER EDUCATION. It trades about -0.02 of its total potential returns per unit of risk. STRAYER EDUCATION is currently generating about 0.04 per unit of volatility. If you would invest 7,307 in STRAYER EDUCATION on September 24, 2024 and sell it today you would earn a total of 1,793 from holding STRAYER EDUCATION or generate 24.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
METHODE ELECTRONICS vs. STRAYER EDUCATION
Performance |
| Timeline |
| METHODE ELECTRONICS |
| STRAYER EDUCATION |
METHODE ELECTRONICS and STRAYER EDUCATION Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with METHODE ELECTRONICS and STRAYER EDUCATION
The main advantage of trading using opposite METHODE ELECTRONICS and STRAYER EDUCATION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if METHODE ELECTRONICS position performs unexpectedly, STRAYER EDUCATION 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 STRAYER EDUCATION will offset losses from the drop in STRAYER EDUCATION's long position.| METHODE ELECTRONICS vs. Cogent Communications Holdings | METHODE ELECTRONICS vs. MAROC TELECOM | METHODE ELECTRONICS vs. Zoom Video Communications | METHODE ELECTRONICS vs. United Breweries Co |
| STRAYER EDUCATION vs. CAREER EDUCATION | STRAYER EDUCATION vs. American Public Education | STRAYER EDUCATION vs. Zoom Video Communications | STRAYER EDUCATION vs. MOVIE GAMES SA |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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