Correlation Between Methode Electronics and Alpha En

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

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

Diversification Opportunities for Methode Electronics and Alpha En

0.3

Correlation Coefficient

Methode Electronics  Alpha En

Weak diversification

The 3 months correlation between Methode and Alpha is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Methode Electronics and alpha En in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on alpha En 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 Alpha En. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of alpha En has no effect on the direction of Methode Electronics i.e., Methode Electronics and Alpha En go up and down completely randomly.

Pair Corralation between Methode Electronics and Alpha En

Considering the 90-day investment horizon Methode Electronics is expected to generate 0.57 times more return on investment than Alpha En. However, Methode Electronics is 1.77 times less risky than Alpha En. It trades about -0.05 of its potential returns per unit of risk. alpha En is currently generating about -0.12 per unit of risk. If you would invest  941.00  in Methode Electronics on June 30, 2025 and sell it today you would lose (181.00) from holding Methode Electronics or give up 19.23% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.97%
Values	Daily Returns

Methode Electronics  vs.  alpha En

Methode Electronics

Risk-Adjusted Performance

Weakest

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

alpha En

Risk-Adjusted Performance

Weakest

Over the last 90 days alpha En has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in October 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Methode Electronics and Alpha En

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

The idea behind Methode Electronics and alpha En 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.