Correlation Between Axcelis Technologies and Methode Electronics

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

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

Diversification Opportunities for Axcelis Technologies and Methode Electronics

-0.39

Correlation Coefficient

Axcelis Technologies  Methode Electronics

Very good diversification

The 3 months correlation between Axcelis and Methode is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Axcelis Technologies and Methode Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Methode Electronics and Axcelis Technologies 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 Axcelis Technologies 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 Axcelis Technologies i.e., Axcelis Technologies and Methode Electronics go up and down completely randomly.

Pair Corralation between Axcelis Technologies and Methode Electronics

Assuming the 90 days trading horizon Axcelis Technologies is expected to generate 0.8 times more return on investment than Methode Electronics. However, Axcelis Technologies is 1.26 times less risky than Methode Electronics. It trades about 0.0 of its potential returns per unit of risk. Methode Electronics is currently generating about -0.04 per unit of risk. If you would invest  8,730  in Axcelis Technologies on October 3, 2024 and sell it today you would lose (2,032) from holding Axcelis Technologies or give up 23.28% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Axcelis Technologies  vs.  Methode Electronics

Axcelis Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Axcelis Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Methode Electronics

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Methode Electronics are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Methode Electronics reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Axcelis Technologies and Methode Electronics

The main advantage of trading using opposite Axcelis Technologies and Methode Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axcelis Technologies 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 Axcelis Technologies 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.