Correlation Between Elutia and Electromed
Can any of the company-specific risk be diversified away by investing in both Elutia and Electromed 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 Elutia and Electromed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elutia Inc and Electromed, you can compare the effects of market volatilities on Elutia and Electromed 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 Elutia with a short position of Electromed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elutia and Electromed.
Diversification Opportunities for Elutia and Electromed
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Elutia and Electromed is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Elutia Inc and Electromed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electromed and Elutia 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 Elutia Inc are associated (or correlated) with Electromed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electromed has no effect on the direction of Elutia i.e., Elutia and Electromed go up and down completely randomly.
Pair Corralation between Elutia and Electromed
Given the investment horizon of 90 days Elutia Inc is expected to generate 1.78 times more return on investment than Electromed. However, Elutia is 1.78 times more volatile than Electromed. It trades about 0.06 of its potential returns per unit of risk. Electromed is currently generating about 0.08 per unit of risk. If you would invest 208.00 in Elutia Inc on September 19, 2024 and sell it today you would earn a total of 205.00 from holding Elutia Inc or generate 98.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elutia Inc vs. Electromed
Performance |
| Timeline |
| Elutia Inc |
| Electromed |
Elutia and Electromed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elutia and Electromed
The main advantage of trading using opposite Elutia and Electromed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elutia position performs unexpectedly, Electromed 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 Electromed will offset losses from the drop in Electromed's long position.| Elutia vs. Ecoloclean Industrs | Elutia vs. Verde Clean Fuels | Elutia vs. RBC Bearings Incorporated | Elutia vs. Perseus Mining Limited |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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