Correlation Between Methode Electronics and Belden
Can any of the company-specific risk be diversified away by investing in both Methode Electronics and Belden 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 Belden into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Methode Electronics and Belden Inc, you can compare the effects of market volatilities on Methode Electronics and Belden 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 Belden. Check out your portfolio center. Please also check ongoing floating volatility patterns of Methode Electronics and Belden.
Diversification Opportunities for Methode Electronics and Belden
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Methode and Belden is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Methode Electronics and Belden Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Belden Inc 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 Belden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Belden Inc has no effect on the direction of Methode Electronics i.e., Methode Electronics and Belden go up and down completely randomly.
Pair Corralation between Methode Electronics and Belden
Considering the 90-day investment horizon Methode Electronics is expected to under-perform the Belden. In addition to that, Methode Electronics is 1.64 times more volatile than Belden Inc. It trades about -0.03 of its total potential returns per unit of risk. Belden Inc is currently generating about 0.05 per unit of volatility. If you would invest 11,713 in Belden Inc on August 31, 2024 and sell it today you would earn a total of 474.00 from holding Belden Inc or generate 4.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Methode Electronics vs. Belden Inc
Performance |
| Timeline |
| Methode Electronics |
| Belden Inc |
Methode Electronics and Belden Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Methode Electronics and Belden
The main advantage of trading using opposite Methode Electronics and Belden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Methode Electronics position performs unexpectedly, Belden 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 Belden will offset losses from the drop in Belden's long position.| Methode Electronics vs. Sanmina | Methode Electronics vs. Benchmark Electronics | Methode Electronics vs. Celestica | Methode Electronics vs. CTS Corporation |
| Belden vs. Clearfield | Belden vs. Comtech Telecommunications Corp | Belden vs. Knowles Cor | Belden vs. Extreme Networks |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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