Correlation Between Alphabet and Methode Electronics

Can any of the company-specific risk be diversified away by investing in both Alphabet 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 Alphabet and Methode Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alphabet Inc Class C and Methode Electronics, you can compare the effects of market volatilities on Alphabet 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 Alphabet with a short position of Methode Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphabet and Methode Electronics.

Diversification Opportunities for Alphabet and Methode Electronics

-0.24

Correlation Coefficient

Alphabet  Methode Electronics

Very good diversification

The 3 months correlation between Alphabet and Methode is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C and Methode Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Methode Electronics and Alphabet 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 Alphabet Inc Class C 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 Alphabet i.e., Alphabet and Methode Electronics go up and down completely randomly.

Pair Corralation between Alphabet and Methode Electronics

Given the investment horizon of 90 days Alphabet Inc Class C is expected to generate 0.52 times more return on investment than Methode Electronics. However, Alphabet Inc Class C is 1.91 times less risky than Methode Electronics. It trades about 0.19 of its potential returns per unit of risk. Methode Electronics is currently generating about -0.05 per unit of risk. If you would invest  25,160  in Alphabet Inc Class C on September 15, 2025 and sell it today you would earn a total of  5,892  from holding Alphabet Inc Class C or generate 23.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Alphabet Inc Class C  vs.  Methode Electronics

Alphabet Class C

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alphabet Inc Class C are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Alphabet reported solid returns over the last few months and may actually be approaching a breakup point.

Methode Electronics

Risk-Adjusted Performance

Weakest

Over the last 90 days Methode Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's technical and fundamental indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Alphabet and Methode Electronics

The main advantage of trading using opposite Alphabet and Methode Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alphabet 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.

The idea behind Alphabet Inc Class C and Methode Electronics pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Equity Valuation module to check real value of public entities based on technical and fundamental data.