Correlation Between Sligro Food and Methode Electronics
Can any of the company-specific risk be diversified away by investing in both Sligro Food 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 Sligro Food and Methode Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sligro Food Group and Methode Electronics, you can compare the effects of market volatilities on Sligro Food 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 Sligro Food with a short position of Methode Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sligro Food and Methode Electronics.
Diversification Opportunities for Sligro Food and Methode Electronics
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sligro and Methode is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Sligro Food Group and Methode Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Methode Electronics and Sligro Food 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 Sligro Food Group 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 Sligro Food i.e., Sligro Food and Methode Electronics go up and down completely randomly.
Pair Corralation between Sligro Food and Methode Electronics
Assuming the 90 days horizon Sligro Food is expected to generate 23.76 times less return on investment than Methode Electronics. But when comparing it to its historical volatility, Sligro Food Group is 38.68 times less risky than Methode Electronics. It trades about 0.13 of its potential returns per unit of risk. Methode Electronics is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 571.00 in Methode Electronics on April 19, 2025 and sell it today you would earn a total of 91.00 from holding Methode Electronics or generate 15.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.41% |
| Values | Daily Returns |
Sligro Food Group vs. Methode Electronics
Performance |
| Timeline |
| Sligro Food Group |
| Methode Electronics |
Sligro Food and Methode Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sligro Food and Methode Electronics
The main advantage of trading using opposite Sligro Food and Methode Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sligro Food 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.| Sligro Food vs. FitLife Brands, Common | Sligro Food vs. Smithfield Foods, Common | Sligro Food vs. Nates Food Co | Sligro Food vs. Orion Office Reit |
| Methode Electronics vs. Sanmina | Methode Electronics vs. Benchmark Electronics | Methode Electronics vs. OSI Systems | Methode Electronics vs. Celestica |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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