Correlation Between Methode Electronics and Cps Technologies

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

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

Diversification Opportunities for Methode Electronics and Cps Technologies

0.25

Correlation Coefficient

Methode Electronics  Cps Technologies

Modest diversification

The 3 months correlation between Methode and Cps is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Methode Electronics and Cps Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cps Technologies 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 Cps Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cps Technologies has no effect on the direction of Methode Electronics i.e., Methode Electronics and Cps Technologies go up and down completely randomly.

Pair Corralation between Methode Electronics and Cps Technologies

Considering the 90-day investment horizon Methode Electronics is expected to under-perform the Cps Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Methode Electronics is 1.0 times less risky than Cps Technologies. The stock trades about -0.05 of its potential returns per unit of risk. The Cps Technologies is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  242.00  in Cps Technologies on July 9, 2025 and sell it today you would earn a total of  134.00  from holding Cps Technologies or generate 55.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Methode Electronics  vs.  Cps Technologies

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 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 November 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Cps Technologies

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cps Technologies are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, Cps Technologies demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Methode Electronics and Cps Technologies

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

The idea behind Methode Electronics and Cps Technologies 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..