Correlation Between Methode Electronics and Mynaric AG
Can any of the company-specific risk be diversified away by investing in both Methode Electronics and Mynaric AG 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 Mynaric AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Methode Electronics and Mynaric AG ADR, you can compare the effects of market volatilities on Methode Electronics and Mynaric AG 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 Mynaric AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Methode Electronics and Mynaric AG.
Diversification Opportunities for Methode Electronics and Mynaric AG
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Methode and Mynaric is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Methode Electronics and Mynaric AG ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mynaric AG ADR 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 Mynaric AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mynaric AG ADR has no effect on the direction of Methode Electronics i.e., Methode Electronics and Mynaric AG go up and down completely randomly.
Pair Corralation between Methode Electronics and Mynaric AG
Considering the 90-day investment horizon Methode Electronics is expected to generate 0.87 times more return on investment than Mynaric AG. However, Methode Electronics is 1.15 times less risky than Mynaric AG. It trades about 0.21 of its potential returns per unit of risk. Mynaric AG ADR is currently generating about 0.15 per unit of risk. If you would invest 923.00 in Methode Electronics on August 31, 2024 and sell it today you would earn a total of 169.00 from holding Methode Electronics or generate 18.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Methode Electronics vs. Mynaric AG ADR
Performance |
| Timeline |
| Methode Electronics |
| Mynaric AG ADR |
Methode Electronics and Mynaric AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Methode Electronics and Mynaric AG
The main advantage of trading using opposite Methode Electronics and Mynaric AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Methode Electronics position performs unexpectedly, Mynaric AG 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 Mynaric AG will offset losses from the drop in Mynaric AG's long position.| Methode Electronics vs. Sanmina | Methode Electronics vs. Benchmark Electronics | Methode Electronics vs. Celestica | Methode Electronics vs. CTS Corporation |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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