Correlation Between Methode Electronics and ASE Industrial
Can any of the company-specific risk be diversified away by investing in both Methode Electronics and ASE Industrial 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 ASE Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Methode Electronics and ASE Industrial Holding, you can compare the effects of market volatilities on Methode Electronics and ASE Industrial 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 ASE Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Methode Electronics and ASE Industrial.
Diversification Opportunities for Methode Electronics and ASE Industrial
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Methode and ASE is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Methode Electronics and ASE Industrial Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASE Industrial Holding 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 ASE Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASE Industrial Holding has no effect on the direction of Methode Electronics i.e., Methode Electronics and ASE Industrial go up and down completely randomly.
Pair Corralation between Methode Electronics and ASE Industrial
Considering the 90-day investment horizon Methode Electronics is expected to generate 1.66 times more return on investment than ASE Industrial. However, Methode Electronics is 1.66 times more volatile than ASE Industrial Holding. It trades about 0.1 of its potential returns per unit of risk. ASE Industrial Holding is currently generating about -0.12 per unit of risk. If you would invest 1,197 in Methode Electronics on January 31, 2024 and sell it today you would earn a total of 63.00 from holding Methode Electronics or generate 5.26% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Methode Electronics vs. ASE Industrial Holding
Performance |
Timeline |
Methode Electronics |
ASE Industrial Holding |
Methode Electronics and ASE Industrial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Methode Electronics and ASE Industrial
The main advantage of trading using opposite Methode Electronics and ASE Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Methode Electronics position performs unexpectedly, ASE Industrial 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 ASE Industrial will offset losses from the drop in ASE Industrial's long position.Methode Electronics vs. Ubiquiti Networks | Methode Electronics vs. Viavi Solutions | Methode Electronics vs. Vislink Technologies | Methode Electronics vs. DZS Inc |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
Other Complementary Tools
Content Syndication Quickly integrate customizable finance content to your own investment portal | |
Bonds Directory Find actively traded corporate debentures issued by US companies | |
Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
Money Managers Screen money managers from public funds and ETFs managed around the world | |
Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals |