Correlation Between Electromed and Enhabit
Can any of the company-specific risk be diversified away by investing in both Electromed and Enhabit 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 Enhabit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electromed and Enhabit, you can compare the effects of market volatilities on Electromed and Enhabit 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 Enhabit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electromed and Enhabit.
Diversification Opportunities for Electromed and Enhabit
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Electromed and Enhabit is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Electromed and Enhabit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enhabit 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 Enhabit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enhabit has no effect on the direction of Electromed i.e., Electromed and Enhabit go up and down completely randomly.
Pair Corralation between Electromed and Enhabit
Given the investment horizon of 90 days Electromed is expected to generate 1.2 times more return on investment than Enhabit. However, Electromed is 1.2 times more volatile than Enhabit. It trades about 0.48 of its potential returns per unit of risk. Enhabit is currently generating about 0.17 per unit of risk. If you would invest 2,288 in Electromed on August 30, 2024 and sell it today you would earn a total of 818.00 from holding Electromed or generate 35.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Electromed vs. Enhabit
Performance |
| Timeline |
| Electromed |
| Enhabit |
Electromed and Enhabit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electromed and Enhabit
The main advantage of trading using opposite Electromed and Enhabit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electromed position performs unexpectedly, Enhabit 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 Enhabit will offset losses from the drop in Enhabit'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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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