Correlation Between Methode Electronics and OSI Systems
Can any of the company-specific risk be diversified away by investing in both Methode Electronics and OSI Systems 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 OSI Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Methode Electronics and OSI Systems, you can compare the effects of market volatilities on Methode Electronics and OSI Systems 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 OSI Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Methode Electronics and OSI Systems.
Diversification Opportunities for Methode Electronics and OSI Systems
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Methode and OSI is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Methode Electronics and OSI Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OSI Systems 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 OSI Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OSI Systems has no effect on the direction of Methode Electronics i.e., Methode Electronics and OSI Systems go up and down completely randomly.
Pair Corralation between Methode Electronics and OSI Systems
Considering the 90-day investment horizon Methode Electronics is expected to generate 1.13 times more return on investment than OSI Systems. However, Methode Electronics is 1.13 times more volatile than OSI Systems. It trades about 0.48 of its potential returns per unit of risk. OSI Systems is currently generating about 0.11 per unit of risk. If you would invest 800.00 in Methode Electronics on April 6, 2025 and sell it today you would earn a total of 204.00 from holding Methode Electronics or generate 25.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Methode Electronics vs. OSI Systems
Performance |
| Timeline |
| Methode Electronics |
| OSI Systems |
Methode Electronics and OSI Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Methode Electronics and OSI Systems
The main advantage of trading using opposite Methode Electronics and OSI Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Methode Electronics position performs unexpectedly, OSI Systems 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 OSI Systems will offset losses from the drop in OSI Systems' long position.| Methode Electronics vs. Bt Brands | Methode Electronics vs. BJs Restaurants | Methode Electronics vs. Dalata Hotel Group | Methode Electronics vs. Sligro Food Group |
| OSI Systems vs. Scholastic | OSI Systems vs. Udemy Inc | OSI Systems vs. PepsiCo | OSI Systems vs. Gannett Co |
Check out your portfolio center.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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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