Correlation Between Methode Electronics and ARITZIA INCSUBVTGSHS

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

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

Diversification Opportunities for Methode Electronics and ARITZIA INCSUBVTGSHS

0.44

Correlation Coefficient

Methode Electronics  ARITZIA INCSUBVTGSHS

Very weak diversification

The 3 months correlation between Methode and ARITZIA is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Methode Electronics and ARITZIA INCSUBVTGSHS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARITZIA INCSUBVTGSHS 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 ARITZIA INCSUBVTGSHS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARITZIA INCSUBVTGSHS has no effect on the direction of Methode Electronics i.e., Methode Electronics and ARITZIA INCSUBVTGSHS go up and down completely randomly.

Pair Corralation between Methode Electronics and ARITZIA INCSUBVTGSHS

Assuming the 90 days trading horizon Methode Electronics is expected to under-perform the ARITZIA INCSUBVTGSHS. In addition to that, Methode Electronics is 1.18 times more volatile than ARITZIA INCSUBVTGSHS. It trades about -0.23 of its total potential returns per unit of risk. ARITZIA INCSUBVTGSHS is currently generating about 0.0 per unit of volatility. If you would invest  3,540  in ARITZIA INCSUBVTGSHS on December 21, 2024 and sell it today you would lose (120.00) from holding ARITZIA INCSUBVTGSHS or give up 3.39% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Methode Electronics  vs.  ARITZIA INCSUBVTGSHS

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 unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

ARITZIA INCSUBVTGSHS

Risk-Adjusted Performance

Very Weak

Over the last 90 days ARITZIA INCSUBVTGSHS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, ARITZIA INCSUBVTGSHS is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Methode Electronics and ARITZIA INCSUBVTGSHS

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

The idea behind Methode Electronics and ARITZIA INCSUBVTGSHS 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.