Correlation Between Sterling Construction and Methode Electronics
Can any of the company-specific risk be diversified away by investing in both Sterling Construction 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 Sterling Construction and Methode Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sterling Construction and Methode Electronics, you can compare the effects of market volatilities on Sterling Construction 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 Sterling Construction with a short position of Methode Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Construction and Methode Electronics.
Diversification Opportunities for Sterling Construction and Methode Electronics
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sterling and Methode is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Construction and Methode Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Methode Electronics and Sterling Construction 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 Sterling Construction 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 Sterling Construction i.e., Sterling Construction and Methode Electronics go up and down completely randomly.
Pair Corralation between Sterling Construction and Methode Electronics
Given the investment horizon of 90 days Sterling Construction is expected to generate 1.32 times more return on investment than Methode Electronics. However, Sterling Construction is 1.32 times more volatile than Methode Electronics. It trades about 0.08 of its potential returns per unit of risk. Methode Electronics is currently generating about 0.02 per unit of risk. If you would invest 27,382 in Sterling Construction on September 3, 2025 and sell it today you would earn a total of 4,669 from holding Sterling Construction or generate 17.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sterling Construction vs. Methode Electronics
Performance |
| Timeline |
| Sterling Construction |
| Methode Electronics |
Sterling Construction and Methode Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Construction and Methode Electronics
The main advantage of trading using opposite Sterling Construction and Methode Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Construction 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.| Sterling Construction vs. British American Tobacco | Sterling Construction vs. 1mage Software | Sterling Construction vs. RadView Software | Sterling Construction vs. Universal Music Group |
| Methode Electronics vs. Sterling Construction | Methode Electronics vs. Australian Agricultural | Methode Electronics vs. BJs Wholesale Club | Methode Electronics vs. Retail Food Group |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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