Correlation Between Methode Electronics and Neonode
Can any of the company-specific risk be diversified away by investing in both Methode Electronics and Neonode 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 Neonode into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Methode Electronics and Neonode, you can compare the effects of market volatilities on Methode Electronics and Neonode 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 Neonode. Check out your portfolio center. Please also check ongoing floating volatility patterns of Methode Electronics and Neonode.
Diversification Opportunities for Methode Electronics and Neonode
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Methode and Neonode is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Methode Electronics and Neonode in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neonode 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 Neonode. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neonode has no effect on the direction of Methode Electronics i.e., Methode Electronics and Neonode go up and down completely randomly.
Pair Corralation between Methode Electronics and Neonode
Considering the 90-day investment horizon Methode Electronics is expected to under-perform the Neonode. But the stock apears to be less risky and, when comparing its historical volatility, Methode Electronics is 1.79 times less risky than Neonode. The stock trades about -0.01 of its potential returns per unit of risk. The Neonode is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 290.00 in Neonode on August 24, 2024 and sell it today you would earn a total of 410.00 from holding Neonode or generate 141.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Methode Electronics vs. Neonode
Performance |
| Timeline |
| Methode Electronics |
| Neonode |
Methode Electronics and Neonode Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Methode Electronics and Neonode
The main advantage of trading using opposite Methode Electronics and Neonode positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Methode Electronics position performs unexpectedly, Neonode 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 Neonode will offset losses from the drop in Neonode's long position.| Methode Electronics vs. Sanmina | Methode Electronics vs. Benchmark Electronics | Methode Electronics vs. OSI Systems | Methode Electronics vs. Celestica |
| Neonode vs. LightPath Technologies | Neonode vs. Methode Electronics | Neonode vs. OSI Systems | Neonode vs. Plexus Corp |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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