Correlation Between Electromed and Smith Nephew
Can any of the company-specific risk be diversified away by investing in both Electromed and Smith Nephew 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 Smith Nephew into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electromed and Smith Nephew SNATS, you can compare the effects of market volatilities on Electromed and Smith Nephew 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 Smith Nephew. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electromed and Smith Nephew.
Diversification Opportunities for Electromed and Smith Nephew
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Electromed and Smith is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Electromed and Smith Nephew SNATS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smith Nephew SNATS 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 Smith Nephew. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smith Nephew SNATS has no effect on the direction of Electromed i.e., Electromed and Smith Nephew go up and down completely randomly.
Pair Corralation between Electromed and Smith Nephew
Given the investment horizon of 90 days Electromed is expected to generate 1.54 times more return on investment than Smith Nephew. However, Electromed is 1.54 times more volatile than Smith Nephew SNATS. It trades about 0.21 of its potential returns per unit of risk. Smith Nephew SNATS is currently generating about 0.02 per unit of risk. If you would invest 1,497 in Electromed on September 2, 2024 and sell it today you would earn a total of 1,581 from holding Electromed or generate 105.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Electromed vs. Smith Nephew SNATS
Performance |
| Timeline |
| Electromed |
| Smith Nephew SNATS |
Electromed and Smith Nephew Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electromed and Smith Nephew
The main advantage of trading using opposite Electromed and Smith Nephew positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electromed position performs unexpectedly, Smith Nephew 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 Smith Nephew will offset losses from the drop in Smith Nephew's long position.| Electromed vs. Profound Medical Corp | Electromed vs. Si Bone | Electromed vs. Nevro Corp | Electromed vs. Orthopediatrics Corp |
| Smith Nephew vs. CochLear Ltd ADR | Smith Nephew vs. Integer Holdings Corp | Smith Nephew vs. Orthofix Medical | Smith Nephew vs. Glaukos 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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