Correlation Between Excelsior Medical and Wellell
Can any of the company-specific risk be diversified away by investing in both Excelsior Medical and Wellell 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 Excelsior Medical and Wellell into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Excelsior Medical Co and Wellell, you can compare the effects of market volatilities on Excelsior Medical and Wellell 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 Excelsior Medical with a short position of Wellell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Excelsior Medical and Wellell.
Diversification Opportunities for Excelsior Medical and Wellell
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Excelsior and Wellell is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Excelsior Medical Co and Wellell in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wellell and Excelsior Medical 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 Excelsior Medical Co are associated (or correlated) with Wellell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wellell has no effect on the direction of Excelsior Medical i.e., Excelsior Medical and Wellell go up and down completely randomly.
Pair Corralation between Excelsior Medical and Wellell
Assuming the 90 days trading horizon Excelsior Medical Co is expected to generate 0.62 times more return on investment than Wellell. However, Excelsior Medical Co is 1.61 times less risky than Wellell. It trades about -0.01 of its potential returns per unit of risk. Wellell is currently generating about -0.01 per unit of risk. If you would invest 8,690 in Excelsior Medical Co on November 4, 2024 and sell it today you would lose (100.00) from holding Excelsior Medical Co or give up 1.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Excelsior Medical Co vs. Wellell
Performance |
| Timeline |
| Excelsior Medical |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Wellell |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Excelsior Medical and Wellell Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Excelsior Medical and Wellell
The main advantage of trading using opposite Excelsior Medical and Wellell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Excelsior Medical position performs unexpectedly, Wellell 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 Wellell will offset losses from the drop in Wellell's long position.The idea behind Excelsior Medical Co and Wellell 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.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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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