Correlation Between METHODE ELECTRONICS and GALENA MINING
Can any of the company-specific risk be diversified away by investing in both METHODE ELECTRONICS and GALENA MINING 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 GALENA MINING into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between METHODE ELECTRONICS and GALENA MINING LTD, you can compare the effects of market volatilities on METHODE ELECTRONICS and GALENA MINING 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 GALENA MINING. Check out your portfolio center. Please also check ongoing floating volatility patterns of METHODE ELECTRONICS and GALENA MINING.
Diversification Opportunities for METHODE ELECTRONICS and GALENA MINING
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between METHODE and GALENA is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding METHODE ELECTRONICS and GALENA MINING LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GALENA MINING LTD 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 GALENA MINING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GALENA MINING LTD has no effect on the direction of METHODE ELECTRONICS i.e., METHODE ELECTRONICS and GALENA MINING go up and down completely randomly.
Pair Corralation between METHODE ELECTRONICS and GALENA MINING
If you would invest 1,114 in METHODE ELECTRONICS on September 28, 2024 and sell it today you would lose (4.00) from holding METHODE ELECTRONICS or give up 0.36% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Flat |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
METHODE ELECTRONICS vs. GALENA MINING LTD
Performance |
Timeline |
METHODE ELECTRONICS |
GALENA MINING LTD |
METHODE ELECTRONICS and GALENA MINING Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with METHODE ELECTRONICS and GALENA MINING
The main advantage of trading using opposite METHODE ELECTRONICS and GALENA MINING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if METHODE ELECTRONICS position performs unexpectedly, GALENA MINING 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 GALENA MINING will offset losses from the drop in GALENA MINING's long position.The idea behind METHODE ELECTRONICS and GALENA MINING LTD 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.GALENA MINING vs. Rio Tinto Group | ||
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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