Correlation Between Curtis Mathes and Methode Electronics

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

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

Diversification Opportunities for Curtis Mathes and Methode Electronics

-0.67

Correlation Coefficient

Curtis Mathes  Methode Electronics

Excellent diversification

The 3 months correlation between Curtis and Methode is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Curtis Mathes Corp and Methode Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Methode Electronics and Curtis Mathes 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 Curtis Mathes Corp 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 Curtis Mathes i.e., Curtis Mathes and Methode Electronics go up and down completely randomly.

Pair Corralation between Curtis Mathes and Methode Electronics

Given the investment horizon of 90 days Curtis Mathes Corp is expected to generate 2.39 times more return on investment than Methode Electronics. However, Curtis Mathes is 2.39 times more volatile than Methode Electronics. It trades about 0.13 of its potential returns per unit of risk. Methode Electronics is currently generating about -0.14 per unit of risk. If you would invest  0.01  in Curtis Mathes Corp on December 28, 2024 and sell it today you would earn a total of  0.01  from holding Curtis Mathes Corp or generate 100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Curtis Mathes Corp  vs.  Methode Electronics

Curtis Mathes Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Curtis Mathes Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, Curtis Mathes showed solid returns over the last few months and may actually be approaching a breakup point.

Methode Electronics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Methode Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Curtis Mathes and Methode Electronics

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

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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.