Correlation Between Electromed and Doximity
Can any of the company-specific risk be diversified away by investing in both Electromed and Doximity 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 Electromed and Doximity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electromed and Doximity, you can compare the effects of market volatilities on Electromed and Doximity 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 Electromed with a short position of Doximity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electromed and Doximity.
Diversification Opportunities for Electromed and Doximity
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Electromed and Doximity is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Electromed and Doximity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Doximity and Electromed 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 Electromed are associated (or correlated) with Doximity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Doximity has no effect on the direction of Electromed i.e., Electromed and Doximity go up and down completely randomly.
Pair Corralation between Electromed and Doximity
Given the investment horizon of 90 days Electromed is expected to generate 0.55 times more return on investment than Doximity. However, Electromed is 1.81 times less risky than Doximity. It trades about 0.26 of its potential returns per unit of risk. Doximity is currently generating about 0.1 per unit of risk. If you would invest 2,090 in Electromed on October 31, 2024 and sell it today you would earn a total of 1,453 from holding Electromed or generate 69.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Electromed vs. Doximity
Performance |
| Timeline |
| Electromed |
| Doximity |
Electromed and Doximity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electromed and Doximity
The main advantage of trading using opposite Electromed and Doximity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electromed position performs unexpectedly, Doximity 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 Doximity will offset losses from the drop in Doximity's long position.| Electromed vs. Neuropace | Electromed vs. Orthopediatrics Corp | Electromed vs. SurModics | Electromed vs. Paragon 28 |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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