Correlation Between Eastern and RadNet
Can any of the company-specific risk be diversified away by investing in both Eastern and RadNet 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 Eastern and RadNet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastern Co and RadNet Inc, you can compare the effects of market volatilities on Eastern and RadNet 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 Eastern with a short position of RadNet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastern and RadNet.
Diversification Opportunities for Eastern and RadNet
Excellent diversification
The 3 months correlation between Eastern and RadNet is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Co and RadNet Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RadNet Inc and Eastern 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 Eastern Co are associated (or correlated) with RadNet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RadNet Inc has no effect on the direction of Eastern i.e., Eastern and RadNet go up and down completely randomly.
Pair Corralation between Eastern and RadNet
Considering the 90-day investment horizon Eastern Co is expected to under-perform the RadNet. But the stock apears to be less risky and, when comparing its historical volatility, Eastern Co is 1.64 times less risky than RadNet. The stock trades about -0.12 of its potential returns per unit of risk. The RadNet Inc is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 6,504 in RadNet Inc on September 1, 2024 and sell it today you would earn a total of 1,672 from holding RadNet Inc or generate 25.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eastern Co vs. RadNet Inc
Performance |
| Timeline |
| Eastern |
| RadNet Inc |
Eastern and RadNet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastern and RadNet
The main advantage of trading using opposite Eastern and RadNet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastern position performs unexpectedly, RadNet 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 RadNet will offset losses from the drop in RadNet's long position.| Eastern vs. Timken Company | Eastern vs. Lincoln Electric Holdings | Eastern vs. Hillman Solutions Corp | Eastern vs. AB SKF |
| RadNet vs. Sotera Health Co | RadNet vs. Neogen | RadNet vs. Myriad Genetics | RadNet vs. bioAffinity Technologies Warrant |
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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