Correlation Between Methode Electronics and Lindblad Expeditions

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

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

Diversification Opportunities for Methode Electronics and Lindblad Expeditions

0.26

Correlation Coefficient

Methode Electronics  Lindblad Expeditions

Modest diversification

The 3 months correlation between Methode and Lindblad is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Methode Electronics and Lindblad Expeditions Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lindblad Expeditions 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 Lindblad Expeditions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lindblad Expeditions has no effect on the direction of Methode Electronics i.e., Methode Electronics and Lindblad Expeditions go up and down completely randomly.

Pair Corralation between Methode Electronics and Lindblad Expeditions

Assuming the 90 days trading horizon Methode Electronics is expected to generate 1.24 times less return on investment than Lindblad Expeditions. But when comparing it to its historical volatility, Methode Electronics is 1.27 times less risky than Lindblad Expeditions. It trades about 0.11 of its potential returns per unit of risk. Lindblad Expeditions Holdings is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  870.00  in Lindblad Expeditions Holdings on October 24, 2024 and sell it today you would earn a total of  290.00  from holding Lindblad Expeditions Holdings or generate 33.33% return on investment over 90 days.

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

Methode Electronics  vs.  Lindblad Expeditions Holdings

Methode Electronics

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Methode Electronics are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Methode Electronics reported solid returns over the last few months and may actually be approaching a breakup point.

Lindblad Expeditions

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lindblad Expeditions Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Lindblad Expeditions reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Methode Electronics and Lindblad Expeditions

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

The idea behind Methode Electronics and Lindblad Expeditions Holdings 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.