Correlation Between Methode Electronics and Ebang International
Can any of the company-specific risk be diversified away by investing in both Methode Electronics and Ebang International 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 Ebang International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Methode Electronics and Ebang International Holdings, you can compare the effects of market volatilities on Methode Electronics and Ebang International 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 Ebang International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Methode Electronics and Ebang International.
Diversification Opportunities for Methode Electronics and Ebang International
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Methode and Ebang is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Methode Electronics and Ebang International Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ebang International 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 Ebang International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ebang International has no effect on the direction of Methode Electronics i.e., Methode Electronics and Ebang International go up and down completely randomly.
Pair Corralation between Methode Electronics and Ebang International
Considering the 90-day investment horizon Methode Electronics is expected to generate 2.2 times less return on investment than Ebang International. But when comparing it to its historical volatility, Methode Electronics is 1.54 times less risky than Ebang International. It trades about 0.06 of its potential returns per unit of risk. Ebang International Holdings is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 593.00 in Ebang International Holdings on August 31, 2024 and sell it today you would earn a total of 152.00 from holding Ebang International Holdings or generate 25.63% 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. Ebang International Holdings
Performance |
| Timeline |
| Methode Electronics |
| Ebang International |
Methode Electronics and Ebang International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Methode Electronics and Ebang International
The main advantage of trading using opposite Methode Electronics and Ebang International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Methode Electronics position performs unexpectedly, Ebang International 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 Ebang International will offset losses from the drop in Ebang International's long position.| Methode Electronics vs. Sanmina | Methode Electronics vs. Benchmark Electronics | Methode Electronics vs. Celestica | Methode Electronics vs. Plexus Corp |
| Ebang International vs. Nano Dimension | Ebang International vs. Desktop Metal | Ebang International vs. HP Inc | Ebang International vs. Cricut Inc |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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