Correlation Between Embecta Corp and Clearpoint Neuro
Can any of the company-specific risk be diversified away by investing in both Embecta Corp and Clearpoint Neuro 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 Embecta Corp and Clearpoint Neuro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Embecta Corp and Clearpoint Neuro, you can compare the effects of market volatilities on Embecta Corp and Clearpoint Neuro 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 Embecta Corp with a short position of Clearpoint Neuro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Embecta Corp and Clearpoint Neuro.
Diversification Opportunities for Embecta Corp and Clearpoint Neuro
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Embecta and Clearpoint is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Embecta Corp and Clearpoint Neuro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearpoint Neuro and Embecta Corp 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 Embecta Corp are associated (or correlated) with Clearpoint Neuro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearpoint Neuro has no effect on the direction of Embecta Corp i.e., Embecta Corp and Clearpoint Neuro go up and down completely randomly.
Pair Corralation between Embecta Corp and Clearpoint Neuro
Given the investment horizon of 90 days Embecta Corp is expected to generate 2.27 times less return on investment than Clearpoint Neuro. But when comparing it to its historical volatility, Embecta Corp is 1.14 times less risky than Clearpoint Neuro. It trades about 0.05 of its potential returns per unit of risk. Clearpoint Neuro is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,262 in Clearpoint Neuro on November 2, 2024 and sell it today you would earn a total of 499.00 from holding Clearpoint Neuro or generate 39.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Embecta Corp vs. Clearpoint Neuro
Performance |
| Timeline |
| Embecta Corp |
| Clearpoint Neuro |
Embecta Corp and Clearpoint Neuro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Embecta Corp and Clearpoint Neuro
The main advantage of trading using opposite Embecta Corp and Clearpoint Neuro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Embecta Corp position performs unexpectedly, Clearpoint Neuro 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 Clearpoint Neuro will offset losses from the drop in Clearpoint Neuro's long position.| Embecta Corp vs. Baxter International | Embecta Corp vs. West Pharmaceutical Services | Embecta Corp vs. ResMed Inc | Embecta Corp vs. The Cooper Companies, |
| Clearpoint Neuro vs. Avita Medical | Clearpoint Neuro vs. Sight Sciences | Clearpoint Neuro vs. Treace Medical Concepts | Clearpoint Neuro vs. Neuropace |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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