Correlation Between EROAD and Sonic Healthcare
Can any of the company-specific risk be diversified away by investing in both EROAD and Sonic Healthcare 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 EROAD and Sonic Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EROAD and Sonic Healthcare, you can compare the effects of market volatilities on EROAD and Sonic Healthcare 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 EROAD with a short position of Sonic Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of EROAD and Sonic Healthcare.
Diversification Opportunities for EROAD and Sonic Healthcare
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between EROAD and Sonic is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding EROAD and Sonic Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonic Healthcare and EROAD 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 EROAD are associated (or correlated) with Sonic Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sonic Healthcare has no effect on the direction of EROAD i.e., EROAD and Sonic Healthcare go up and down completely randomly.
Pair Corralation between EROAD and Sonic Healthcare
Assuming the 90 days trading horizon EROAD is expected to generate 1.36 times more return on investment than Sonic Healthcare. However, EROAD is 1.36 times more volatile than Sonic Healthcare. It trades about 0.06 of its potential returns per unit of risk. Sonic Healthcare is currently generating about 0.04 per unit of risk. If you would invest 82.00 in EROAD on August 25, 2024 and sell it today you would earn a total of 2.00 from holding EROAD or generate 2.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
EROAD vs. Sonic Healthcare
Performance |
| Timeline |
| EROAD |
| Sonic Healthcare |
EROAD and Sonic Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EROAD and Sonic Healthcare
The main advantage of trading using opposite EROAD and Sonic Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EROAD position performs unexpectedly, Sonic Healthcare 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 Sonic Healthcare will offset losses from the drop in Sonic Healthcare's long position.| EROAD vs. National Storage REIT | EROAD vs. Aussie Broadband | EROAD vs. Neurotech International | EROAD vs. Data3 |
| Sonic Healthcare vs. Diversified United Investment | Sonic Healthcare vs. Australian United Investment | Sonic Healthcare vs. EROAD | Sonic Healthcare vs. TPG Telecom |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments |