Correlation Between Electromed and Neuropace
Can any of the company-specific risk be diversified away by investing in both Electromed and Neuropace 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 Neuropace into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electromed and Neuropace, you can compare the effects of market volatilities on Electromed and Neuropace 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 Neuropace. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electromed and Neuropace.
Diversification Opportunities for Electromed and Neuropace
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Electromed and Neuropace is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Electromed and Neuropace in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neuropace 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 Neuropace. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neuropace has no effect on the direction of Electromed i.e., Electromed and Neuropace go up and down completely randomly.
Pair Corralation between Electromed and Neuropace
Given the investment horizon of 90 days Electromed is expected to generate 1.33 times less return on investment than Neuropace. But when comparing it to its historical volatility, Electromed is 1.16 times less risky than Neuropace. It trades about 0.33 of its potential returns per unit of risk. Neuropace is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 1,119 in Neuropace on November 1, 2024 and sell it today you would earn a total of 300.00 from holding Neuropace or generate 26.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Electromed vs. Neuropace
Performance |
| Timeline |
| Electromed |
| Neuropace |
Electromed and Neuropace Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electromed and Neuropace
The main advantage of trading using opposite Electromed and Neuropace positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electromed position performs unexpectedly, Neuropace 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 Neuropace will offset losses from the drop in Neuropace's long position.| Electromed vs. Neuropace | Electromed vs. Orthopediatrics Corp | Electromed vs. SurModics | Electromed vs. Paragon 28 |
| Neuropace vs. Integer Holdings Corp | Neuropace vs. Glaukos Corp | Neuropace vs. CONMED | Neuropace vs. Pulmonx Corp |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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