Correlation Between Methanex and Spectra
Can any of the company-specific risk be diversified away by investing in both Methanex and Spectra 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 Methanex and Spectra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Methanex and Spectra, you can compare the effects of market volatilities on Methanex and Spectra 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 Methanex with a short position of Spectra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Methanex and Spectra.
Diversification Opportunities for Methanex and Spectra
Good diversification
The 3 months correlation between Methanex and Spectra is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Methanex and Spectra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spectra and Methanex 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 Methanex are associated (or correlated) with Spectra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spectra has no effect on the direction of Methanex i.e., Methanex and Spectra go up and down completely randomly.
Pair Corralation between Methanex and Spectra
Assuming the 90 days horizon Methanex is expected to under-perform the Spectra. But the stock apears to be less risky and, when comparing its historical volatility, Methanex is 1.14 times less risky than Spectra. The stock trades about -0.33 of its potential returns per unit of risk. The Spectra is currently generating about -0.21 of returns per unit of risk over similar time horizon. If you would invest 20.00 in Spectra on November 28, 2024 and sell it today you would lose (2.00) from holding Spectra or give up 10.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Methanex vs. Spectra
Performance |
| Timeline |
| Methanex |
| Spectra |
Methanex and Spectra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Methanex and Spectra
The main advantage of trading using opposite Methanex and Spectra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Methanex position performs unexpectedly, Spectra 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 Spectra will offset losses from the drop in Spectra's long position.| Methanex vs. Finning International | Methanex vs. Keyera Corp | Methanex vs. Linamar | Methanex vs. Russel Metals |
| Spectra vs. Westshore Terminals Investment | Spectra vs. Economic Investment Trust | Spectra vs. XXIX Metal Corp | Spectra vs. Hemisphere Energy |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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