Correlation Between IRhythm Technologies and Electromed
Can any of the company-specific risk be diversified away by investing in both IRhythm Technologies and Electromed 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 IRhythm Technologies and Electromed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iRhythm Technologies and Electromed, you can compare the effects of market volatilities on IRhythm Technologies and Electromed 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 IRhythm Technologies with a short position of Electromed. Check out your portfolio center. Please also check ongoing floating volatility patterns of IRhythm Technologies and Electromed.
Diversification Opportunities for IRhythm Technologies and Electromed
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IRhythm and Electromed is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding iRhythm Technologies and Electromed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electromed and IRhythm Technologies 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 iRhythm Technologies are associated (or correlated) with Electromed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electromed has no effect on the direction of IRhythm Technologies i.e., IRhythm Technologies and Electromed go up and down completely randomly.
Pair Corralation between IRhythm Technologies and Electromed
Given the investment horizon of 90 days iRhythm Technologies is expected to generate 1.33 times more return on investment than Electromed. However, IRhythm Technologies is 1.33 times more volatile than Electromed. It trades about 0.3 of its potential returns per unit of risk. Electromed is currently generating about 0.14 per unit of risk. If you would invest 7,399 in iRhythm Technologies on October 23, 2024 and sell it today you would earn a total of 3,434 from holding iRhythm Technologies or generate 46.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iRhythm Technologies vs. Electromed
Performance |
| Timeline |
| iRhythm Technologies |
| Electromed |
IRhythm Technologies and Electromed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IRhythm Technologies and Electromed
The main advantage of trading using opposite IRhythm Technologies and Electromed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IRhythm Technologies position performs unexpectedly, Electromed 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 Electromed will offset losses from the drop in Electromed's long position.| IRhythm Technologies vs. Integer Holdings Corp | IRhythm Technologies vs. CONMED | IRhythm Technologies vs. LivaNova PLC | IRhythm Technologies vs. Orthopediatrics Corp |
| Electromed vs. Neuropace | Electromed vs. Orthopediatrics Corp | Electromed vs. SurModics | Electromed vs. Paragon 28 |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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