Correlation Between ICU Medical and Eastern
Can any of the company-specific risk be diversified away by investing in both ICU Medical and Eastern 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 ICU Medical and Eastern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ICU Medical and Eastern Co, you can compare the effects of market volatilities on ICU Medical and Eastern 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 ICU Medical with a short position of Eastern. Check out your portfolio center. Please also check ongoing floating volatility patterns of ICU Medical and Eastern.
Diversification Opportunities for ICU Medical and Eastern
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ICU and Eastern is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding ICU Medical and Eastern Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern and ICU Medical 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 ICU Medical are associated (or correlated) with Eastern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern has no effect on the direction of ICU Medical i.e., ICU Medical and Eastern go up and down completely randomly.
Pair Corralation between ICU Medical and Eastern
Given the investment horizon of 90 days ICU Medical is expected to generate 1.07 times more return on investment than Eastern. However, ICU Medical is 1.07 times more volatile than Eastern Co. It trades about 0.12 of its potential returns per unit of risk. Eastern Co is currently generating about 0.03 per unit of risk. If you would invest 10,634 in ICU Medical on August 29, 2024 and sell it today you would earn a total of 5,341 from holding ICU Medical or generate 50.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ICU Medical vs. Eastern Co
Performance |
| Timeline |
| ICU Medical |
| Eastern |
ICU Medical and Eastern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ICU Medical and Eastern
The main advantage of trading using opposite ICU Medical and Eastern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ICU Medical position performs unexpectedly, Eastern 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 Eastern will offset losses from the drop in Eastern's long position.| ICU Medical vs. Femasys | ICU Medical vs. Sharps Technology Warrant | ICU Medical vs. GlucoTrack | ICU Medical vs. Walt Disney |
| Eastern vs. Timken Company | Eastern vs. Lincoln Electric Holdings | Eastern vs. AB SKF | Eastern vs. Kennametal |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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