Correlation Between CVRx and Electromed
Can any of the company-specific risk be diversified away by investing in both CVRx and Electromed 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 CVRx and Electromed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVRx Inc and Electromed, you can compare the effects of market volatilities on CVRx and Electromed 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 CVRx with a short position of Electromed. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVRx and Electromed.
Diversification Opportunities for CVRx and Electromed
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CVRx and Electromed is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding CVRx Inc and Electromed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electromed and CVRx 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 CVRx Inc are associated (or correlated) with Electromed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electromed has no effect on the direction of CVRx i.e., CVRx and Electromed go up and down completely randomly.
Pair Corralation between CVRx and Electromed
Given the investment horizon of 90 days CVRx is expected to generate 1.61 times less return on investment than Electromed. In addition to that, CVRx is 1.84 times more volatile than Electromed. It trades about 0.03 of its total potential returns per unit of risk. Electromed is currently generating about 0.09 per unit of volatility. If you would invest 1,224 in Electromed on August 31, 2024 and sell it today you would earn a total of 1,854 from holding Electromed or generate 151.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CVRx Inc vs. Electromed
Performance |
| Timeline |
| CVRx Inc |
| Electromed |
CVRx and Electromed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVRx and Electromed
The main advantage of trading using opposite CVRx and Electromed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVRx position performs unexpectedly, Electromed 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 Electromed will offset losses from the drop in Electromed's long position.The idea behind CVRx Inc and Electromed 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.| Electromed vs. Abbott Laboratories | Electromed vs. Medtronic PLC | Electromed vs. Edwards Lifesciences Corp | Electromed vs. ZimVie Inc |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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