Correlation Between Methode Electronics and Interlink Electronics
Can any of the company-specific risk be diversified away by investing in both Methode Electronics and Interlink Electronics 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 Interlink Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Methode Electronics and Interlink Electronics, you can compare the effects of market volatilities on Methode Electronics and Interlink Electronics 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 Interlink Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Methode Electronics and Interlink Electronics.
Diversification Opportunities for Methode Electronics and Interlink Electronics
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Methode and Interlink is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Methode Electronics and Interlink Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Interlink Electronics 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 Interlink Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Interlink Electronics has no effect on the direction of Methode Electronics i.e., Methode Electronics and Interlink Electronics go up and down completely randomly.
Pair Corralation between Methode Electronics and Interlink Electronics
Considering the 90-day investment horizon Methode Electronics is expected to under-perform the Interlink Electronics. But the stock apears to be less risky and, when comparing its historical volatility, Methode Electronics is 1.11 times less risky than Interlink Electronics. The stock trades about -0.06 of its potential returns per unit of risk. The Interlink Electronics is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 566.00 in Interlink Electronics on August 27, 2024 and sell it today you would lose (121.00) from holding Interlink Electronics or give up 21.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.9% |
| Values | Daily Returns |
Methode Electronics vs. Interlink Electronics
Performance |
| Timeline |
| Methode Electronics |
| Interlink Electronics |
Methode Electronics and Interlink Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Methode Electronics and Interlink Electronics
The main advantage of trading using opposite Methode Electronics and Interlink Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Methode Electronics position performs unexpectedly, Interlink Electronics 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 Interlink Electronics will offset losses from the drop in Interlink Electronics' long position.| Methode Electronics vs. Sanmina | Methode Electronics vs. Benchmark Electronics | Methode Electronics vs. OSI Systems | Methode Electronics vs. Celestica |
| Interlink Electronics vs. Methode Electronics | Interlink Electronics vs. Bel Fuse A | Interlink Electronics vs. CTS Corporation | Interlink Electronics vs. MicroCloud Hologram |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
Other Complementary Tools
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope |