Correlation Between Methode Electronics and TTM Technologies
Can any of the company-specific risk be diversified away by investing in both Methode Electronics and TTM Technologies 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 TTM Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Methode Electronics and TTM Technologies, you can compare the effects of market volatilities on Methode Electronics and TTM Technologies 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 TTM Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Methode Electronics and TTM Technologies.
Diversification Opportunities for Methode Electronics and TTM Technologies
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Methode and TTM is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Methode Electronics and TTM Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TTM Technologies 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 TTM Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TTM Technologies has no effect on the direction of Methode Electronics i.e., Methode Electronics and TTM Technologies go up and down completely randomly.
Pair Corralation between Methode Electronics and TTM Technologies
Considering the 90-day investment horizon Methode Electronics is expected to under-perform the TTM Technologies. In addition to that, Methode Electronics is 1.1 times more volatile than TTM Technologies. It trades about -0.02 of its total potential returns per unit of risk. TTM Technologies is currently generating about 0.31 per unit of volatility. If you would invest 1,857 in TTM Technologies on August 24, 2024 and sell it today you would earn a total of 507.00 from holding TTM Technologies or generate 27.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Methode Electronics vs. TTM Technologies
Performance |
| Timeline |
| Methode Electronics |
| TTM Technologies |
Methode Electronics and TTM Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Methode Electronics and TTM Technologies
The main advantage of trading using opposite Methode Electronics and TTM Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Methode Electronics position performs unexpectedly, TTM Technologies 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 TTM Technologies will offset losses from the drop in TTM Technologies' long position.| Methode Electronics vs. Sanmina | Methode Electronics vs. Benchmark Electronics | Methode Electronics vs. OSI Systems | Methode Electronics vs. Celestica |
| TTM Technologies vs. Sanmina | TTM Technologies vs. Benchmark Electronics | TTM Technologies vs. Methode Electronics | TTM Technologies vs. OSI Systems |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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