Correlation Between Methode Electronics and CANON MARKETING

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

By analyzing existing cross correlation between Methode Electronics and CANON MARKETING JP, you can compare the effects of market volatilities on Methode Electronics and CANON MARKETING 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 CANON MARKETING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Methode Electronics and CANON MARKETING.

Diversification Opportunities for Methode Electronics and CANON MARKETING

0.33

Correlation Coefficient

Methode Electronics  CANON MARKETING

Weak diversification

The 3 months correlation between Methode and CANON is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Methode Electronics and CANON MARKETING JP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CANON MARKETING JP 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 CANON MARKETING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CANON MARKETING JP has no effect on the direction of Methode Electronics i.e., Methode Electronics and CANON MARKETING go up and down completely randomly.

Pair Corralation between Methode Electronics and CANON MARKETING

Assuming the 90 days trading horizon Methode Electronics is expected to under-perform the CANON MARKETING. In addition to that, Methode Electronics is 3.03 times more volatile than CANON MARKETING JP. It trades about -0.01 of its total potential returns per unit of risk. CANON MARKETING JP is currently generating about 0.05 per unit of volatility. If you would invest  2,503  in CANON MARKETING JP on April 21, 2025 and sell it today you would earn a total of  497.00  from holding CANON MARKETING JP or generate 19.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Methode Electronics  vs.  CANON MARKETING JP

Methode Electronics

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Methode Electronics are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Methode Electronics reported solid returns over the last few months and may actually be approaching a breakup point.

CANON MARKETING JP

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CANON MARKETING JP are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable forward-looking indicators, CANON MARKETING is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Methode Electronics and CANON MARKETING

The main advantage of trading using opposite Methode Electronics and CANON MARKETING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Methode Electronics position performs unexpectedly, CANON MARKETING 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 CANON MARKETING will offset losses from the drop in CANON MARKETING's long position.

The idea behind Methode Electronics and CANON MARKETING JP 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.

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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.