Correlation Between Methode Electronics and Amphenol
Can any of the company-specific risk be diversified away by investing in both Methode Electronics and Amphenol 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 Amphenol into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Methode Electronics and Amphenol, you can compare the effects of market volatilities on Methode Electronics and Amphenol 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 Amphenol. Check out your portfolio center. Please also check ongoing floating volatility patterns of Methode Electronics and Amphenol.
Diversification Opportunities for Methode Electronics and Amphenol
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Methode and Amphenol is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Methode Electronics and Amphenol in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amphenol 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 Amphenol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amphenol has no effect on the direction of Methode Electronics i.e., Methode Electronics and Amphenol go up and down completely randomly.
Pair Corralation between Methode Electronics and Amphenol
Considering the 90-day investment horizon Methode Electronics is expected to generate 2.4 times more return on investment than Amphenol. However, Methode Electronics is 2.4 times more volatile than Amphenol. It trades about 0.15 of its potential returns per unit of risk. Amphenol is currently generating about 0.19 per unit of risk. If you would invest 953.00 in Methode Electronics on August 27, 2024 and sell it today you would earn a total of 116.00 from holding Methode Electronics or generate 12.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Methode Electronics vs. Amphenol
Performance |
| Timeline |
| Methode Electronics |
| Amphenol |
Methode Electronics and Amphenol Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Methode Electronics and Amphenol
The main advantage of trading using opposite Methode Electronics and Amphenol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Methode Electronics position performs unexpectedly, Amphenol 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 Amphenol will offset losses from the drop in Amphenol's long position.| Methode Electronics vs. Sanmina | Methode Electronics vs. Benchmark Electronics | Methode Electronics vs. OSI Systems | Methode Electronics vs. Celestica |
| Amphenol vs. Plexus Corp | Amphenol vs. Jabil Circuit | Amphenol vs. Sanmina | Amphenol vs. Methode Electronics |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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