Correlation Between Methode Electronics and AT S
Can any of the company-specific risk be diversified away by investing in both Methode Electronics and AT S 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 AT S into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Methode Electronics and AT S Austria, you can compare the effects of market volatilities on Methode Electronics and AT S 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 AT S. Check out your portfolio center. Please also check ongoing floating volatility patterns of Methode Electronics and AT S.
Diversification Opportunities for Methode Electronics and AT S
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Methode and ASAAF is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Methode Electronics and AT S Austria in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AT S Austria 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 AT S. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AT S Austria has no effect on the direction of Methode Electronics i.e., Methode Electronics and AT S go up and down completely randomly.
Pair Corralation between Methode Electronics and AT S
Considering the 90-day investment horizon Methode Electronics is expected to under-perform the AT S. In addition to that, Methode Electronics is 1.24 times more volatile than AT S Austria. It trades about -0.05 of its total potential returns per unit of risk. AT S Austria is currently generating about -0.05 per unit of volatility. If you would invest 4,339 in AT S Austria on November 4, 2024 and sell it today you would lose (3,086) from holding AT S Austria or give up 71.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Methode Electronics vs. AT S Austria
Performance |
| Timeline |
| Methode Electronics |
| AT S Austria |
Methode Electronics and AT S Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Methode Electronics and AT S
The main advantage of trading using opposite Methode Electronics and AT S positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Methode Electronics position performs unexpectedly, AT S 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 AT S will offset losses from the drop in AT S's long position.| Methode Electronics vs. Sanmina | Methode Electronics vs. Benchmark Electronics | Methode Electronics vs. OSI Systems | Methode Electronics vs. Celestica |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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