Correlation Between Reinsurance Group and Methode Electronics
Can any of the company-specific risk be diversified away by investing in both Reinsurance Group and Methode 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 Reinsurance Group and Methode Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Reinsurance Group of and Methode Electronics, you can compare the effects of market volatilities on Reinsurance Group and Methode 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 Reinsurance Group with a short position of Methode Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reinsurance Group and Methode Electronics.
Diversification Opportunities for Reinsurance Group and Methode Electronics
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Reinsurance and Methode is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Reinsurance Group of and Methode Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Methode Electronics and Reinsurance Group 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 Reinsurance Group of are associated (or correlated) with Methode Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Methode Electronics has no effect on the direction of Reinsurance Group i.e., Reinsurance Group and Methode Electronics go up and down completely randomly.
Pair Corralation between Reinsurance Group and Methode Electronics
Assuming the 90 days trading horizon Reinsurance Group of is expected to generate 0.45 times more return on investment than Methode Electronics. However, Reinsurance Group of is 2.21 times less risky than Methode Electronics. It trades about 0.1 of its potential returns per unit of risk. Methode Electronics is currently generating about 0.05 per unit of risk. If you would invest 17,836 in Reinsurance Group of on November 3, 2024 and sell it today you would earn a total of 4,164 from holding Reinsurance Group of or generate 23.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Reinsurance Group of vs. Methode Electronics
Performance |
| Timeline |
| Reinsurance Group |
| Methode Electronics |
Reinsurance Group and Methode Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reinsurance Group and Methode Electronics
The main advantage of trading using opposite Reinsurance Group and Methode Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reinsurance Group position performs unexpectedly, Methode 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 Methode Electronics will offset losses from the drop in Methode Electronics' long position.| Reinsurance Group vs. CODERE ONLINE LUX | Reinsurance Group vs. PACIFIC ONLINE | Reinsurance Group vs. Singapore Reinsurance | Reinsurance Group vs. Zurich Insurance Group |
| Methode Electronics vs. GREENX METALS LTD | Methode Electronics vs. Ringmetall SE | Methode Electronics vs. BRIT AMER TOBACCO | Methode Electronics vs. Harmony Gold Mining |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
Other Complementary Tools
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |