Correlation Between SOLSTAD OFFSHORE and METHODE ELECTRONICS
Can any of the company-specific risk be diversified away by investing in both SOLSTAD OFFSHORE 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 SOLSTAD OFFSHORE and METHODE ELECTRONICS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SOLSTAD OFFSHORE NK and METHODE ELECTRONICS, you can compare the effects of market volatilities on SOLSTAD OFFSHORE 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 SOLSTAD OFFSHORE with a short position of METHODE ELECTRONICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of SOLSTAD OFFSHORE and METHODE ELECTRONICS.
Diversification Opportunities for SOLSTAD OFFSHORE and METHODE ELECTRONICS
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SOLSTAD and METHODE is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding SOLSTAD OFFSHORE NK and METHODE ELECTRONICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on METHODE ELECTRONICS and SOLSTAD OFFSHORE 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 SOLSTAD OFFSHORE NK 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 SOLSTAD OFFSHORE i.e., SOLSTAD OFFSHORE and METHODE ELECTRONICS go up and down completely randomly.
Pair Corralation between SOLSTAD OFFSHORE and METHODE ELECTRONICS
Assuming the 90 days horizon SOLSTAD OFFSHORE NK is expected to generate 1.07 times more return on investment than METHODE ELECTRONICS. However, SOLSTAD OFFSHORE is 1.07 times more volatile than METHODE ELECTRONICS. It trades about 0.02 of its potential returns per unit of risk. METHODE ELECTRONICS is currently generating about -0.05 per unit of risk. If you would invest 349.00 in SOLSTAD OFFSHORE NK on August 31, 2024 and sell it today you would earn a total of 11.00 from holding SOLSTAD OFFSHORE NK or generate 3.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SOLSTAD OFFSHORE NK vs. METHODE ELECTRONICS
Performance |
| Timeline |
| SOLSTAD OFFSHORE |
| METHODE ELECTRONICS |
SOLSTAD OFFSHORE and METHODE ELECTRONICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SOLSTAD OFFSHORE and METHODE ELECTRONICS
The main advantage of trading using opposite SOLSTAD OFFSHORE and METHODE ELECTRONICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SOLSTAD OFFSHORE 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's long position.| SOLSTAD OFFSHORE vs. UNIVERSAL MUSIC GROUP | SOLSTAD OFFSHORE vs. Cardinal Health | SOLSTAD OFFSHORE vs. CVS Health | SOLSTAD OFFSHORE vs. GUARDANT HEALTH CL |
| METHODE ELECTRONICS vs. SOLSTAD OFFSHORE NK | METHODE ELECTRONICS vs. Infrastrutture Wireless Italiane | METHODE ELECTRONICS vs. Tower One Wireless | METHODE ELECTRONICS vs. 24SEVENOFFICE GROUP AB |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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