Correlation Between Meiko Electronics and Trimble
Can any of the company-specific risk be diversified away by investing in both Meiko Electronics and Trimble 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 Meiko Electronics and Trimble into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Meiko Electronics Co and Trimble, you can compare the effects of market volatilities on Meiko Electronics and Trimble 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 Meiko Electronics with a short position of Trimble. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meiko Electronics and Trimble.
Diversification Opportunities for Meiko Electronics and Trimble
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Meiko and Trimble is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Meiko Electronics Co and Trimble in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trimble and Meiko 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 Meiko Electronics Co are associated (or correlated) with Trimble. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trimble has no effect on the direction of Meiko Electronics i.e., Meiko Electronics and Trimble go up and down completely randomly.
Pair Corralation between Meiko Electronics and Trimble
Assuming the 90 days horizon Meiko Electronics Co is expected to generate 1.66 times more return on investment than Trimble. However, Meiko Electronics is 1.66 times more volatile than Trimble. It trades about 0.09 of its potential returns per unit of risk. Trimble is currently generating about 0.06 per unit of risk. If you would invest 1,770 in Meiko Electronics Co on September 12, 2024 and sell it today you would earn a total of 3,830 from holding Meiko Electronics Co or generate 216.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Meiko Electronics Co vs. Trimble
Performance |
| Timeline |
| Meiko Electronics |
| Trimble |
Meiko Electronics and Trimble Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meiko Electronics and Trimble
The main advantage of trading using opposite Meiko Electronics and Trimble positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meiko Electronics position performs unexpectedly, Trimble 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 Trimble will offset losses from the drop in Trimble's long position.| Meiko Electronics vs. Benchmark Electronics | Meiko Electronics vs. Superior Plus Corp | Meiko Electronics vs. SIVERS SEMICONDUCTORS AB | Meiko Electronics vs. Norsk Hydro ASA |
| Trimble vs. Methode Electronics | Trimble vs. ETFS Coffee ETC | Trimble vs. Meiko Electronics Co | Trimble vs. DATAGROUP SE |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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