Correlation Between Ilex Medical and Brainsway
Can any of the company-specific risk be diversified away by investing in both Ilex Medical and Brainsway 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 Ilex Medical and Brainsway into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ilex Medical and Brainsway, you can compare the effects of market volatilities on Ilex Medical and Brainsway 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 Ilex Medical with a short position of Brainsway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ilex Medical and Brainsway.
Diversification Opportunities for Ilex Medical and Brainsway
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ilex and Brainsway is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Ilex Medical and Brainsway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brainsway and Ilex 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 Ilex Medical are associated (or correlated) with Brainsway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brainsway has no effect on the direction of Ilex Medical i.e., Ilex Medical and Brainsway go up and down completely randomly.
Pair Corralation between Ilex Medical and Brainsway
Assuming the 90 days trading horizon Ilex Medical is expected to generate 2.78 times less return on investment than Brainsway. But when comparing it to its historical volatility, Ilex Medical is 2.0 times less risky than Brainsway. It trades about 0.08 of its potential returns per unit of risk. Brainsway is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 84,000 in Brainsway on September 1, 2024 and sell it today you would earn a total of 92,100 from holding Brainsway or generate 109.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ilex Medical vs. Brainsway
Performance |
| Timeline |
| Ilex Medical |
| Brainsway |
Ilex Medical and Brainsway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ilex Medical and Brainsway
The main advantage of trading using opposite Ilex Medical and Brainsway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ilex Medical position performs unexpectedly, Brainsway 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 Brainsway will offset losses from the drop in Brainsway's long position.The idea behind Ilex Medical and Brainsway pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Brainsway vs. Israel China Biotechnology | Brainsway vs. Scope Metals Group | Brainsway vs. Storage Drop Storage | Brainsway vs. Suny Cellular Communication |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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