Correlation Between EDAP TMS and Cross Country
Can any of the company-specific risk be diversified away by investing in both EDAP TMS and Cross Country 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 EDAP TMS and Cross Country into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EDAP TMS SA and Cross Country Healthcare, you can compare the effects of market volatilities on EDAP TMS and Cross Country 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 EDAP TMS with a short position of Cross Country. Check out your portfolio center. Please also check ongoing floating volatility patterns of EDAP TMS and Cross Country.
Diversification Opportunities for EDAP TMS and Cross Country
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between EDAP and Cross is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding EDAP TMS SA and Cross Country Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cross Country Healthcare and EDAP TMS 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 EDAP TMS SA are associated (or correlated) with Cross Country. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cross Country Healthcare has no effect on the direction of EDAP TMS i.e., EDAP TMS and Cross Country go up and down completely randomly.
Pair Corralation between EDAP TMS and Cross Country
Given the investment horizon of 90 days EDAP TMS SA is expected to under-perform the Cross Country. But the stock apears to be less risky and, when comparing its historical volatility, EDAP TMS SA is 1.55 times less risky than Cross Country. The stock trades about -0.24 of its potential returns per unit of risk. The Cross Country Healthcare is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 1,181 in Cross Country Healthcare on August 28, 2024 and sell it today you would lose (94.00) from holding Cross Country Healthcare or give up 7.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
EDAP TMS SA vs. Cross Country Healthcare
Performance |
| Timeline |
| EDAP TMS SA |
| Cross Country Healthcare |
EDAP TMS and Cross Country Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EDAP TMS and Cross Country
The main advantage of trading using opposite EDAP TMS and Cross Country positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EDAP TMS position performs unexpectedly, Cross Country 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 Cross Country will offset losses from the drop in Cross Country's long position.| EDAP TMS vs. Patterson Companies | EDAP TMS vs. Henry Schein | EDAP TMS vs. McKesson | EDAP TMS vs. Cardinal Health |
| Cross Country vs. ASGN Inc | Cross Country vs. Kforce Inc | Cross Country vs. Kelly Services A | Cross Country vs. AMN Healthcare Services |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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