Correlation Between Electromed and TransMedics
Can any of the company-specific risk be diversified away by investing in both Electromed and TransMedics 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 TransMedics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electromed and TransMedics Group, you can compare the effects of market volatilities on Electromed and TransMedics 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 TransMedics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electromed and TransMedics.
Diversification Opportunities for Electromed and TransMedics
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Electromed and TransMedics is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Electromed and TransMedics Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TransMedics Group 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 TransMedics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TransMedics Group has no effect on the direction of Electromed i.e., Electromed and TransMedics go up and down completely randomly.
Pair Corralation between Electromed and TransMedics
Given the investment horizon of 90 days Electromed is expected to generate 0.73 times more return on investment than TransMedics. However, Electromed is 1.37 times less risky than TransMedics. It trades about 0.5 of its potential returns per unit of risk. TransMedics Group is currently generating about 0.08 per unit of risk. If you would invest 2,290 in Electromed on September 2, 2024 and sell it today you would earn a total of 788.00 from holding Electromed or generate 34.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Electromed vs. TransMedics Group
Performance |
| Timeline |
| Electromed |
| TransMedics Group |
Electromed and TransMedics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electromed and TransMedics
The main advantage of trading using opposite Electromed and TransMedics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electromed position performs unexpectedly, TransMedics 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 TransMedics will offset losses from the drop in TransMedics' long position.| Electromed vs. Profound Medical Corp | Electromed vs. Si Bone | Electromed vs. Nevro Corp | Electromed vs. Orthopediatrics Corp |
| TransMedics vs. Inspire Medical Systems | TransMedics vs. Inari Medical | TransMedics vs. InMode | TransMedics vs. Insulet |
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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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