Correlation Between Laboratory and Chemed Corp
Can any of the company-specific risk be diversified away by investing in both Laboratory and Chemed Corp 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 Laboratory and Chemed Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Laboratory of and Chemed Corp, you can compare the effects of market volatilities on Laboratory and Chemed Corp 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 Laboratory with a short position of Chemed Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Laboratory and Chemed Corp.
Diversification Opportunities for Laboratory and Chemed Corp
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Laboratory and Chemed is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Laboratory of and Chemed Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chemed Corp and Laboratory 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 Laboratory of are associated (or correlated) with Chemed Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chemed Corp has no effect on the direction of Laboratory i.e., Laboratory and Chemed Corp go up and down completely randomly.
Pair Corralation between Laboratory and Chemed Corp
Allowing for the 90-day total investment horizon Laboratory of is expected to generate 0.42 times more return on investment than Chemed Corp. However, Laboratory of is 2.37 times less risky than Chemed Corp. It trades about 0.21 of its potential returns per unit of risk. Chemed Corp is currently generating about -0.09 per unit of risk. If you would invest 22,738 in Laboratory of on August 27, 2024 and sell it today you would earn a total of 1,229 from holding Laboratory of or generate 5.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Laboratory of vs. Chemed Corp
Performance |
| Timeline |
| Laboratory |
| Chemed Corp |
Laboratory and Chemed Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Laboratory and Chemed Corp
The main advantage of trading using opposite Laboratory and Chemed Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Laboratory position performs unexpectedly, Chemed Corp 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 Chemed Corp will offset losses from the drop in Chemed Corp's long position.| Laboratory vs. Quest Diagnostics Incorporated | Laboratory vs. Waters | Laboratory vs. Universal Health Services | Laboratory vs. Humana Inc |
| Chemed Corp vs. Encompass Health Corp | Chemed Corp vs. Pennant Group | Chemed Corp vs. Acadia Healthcare | Chemed Corp vs. Select Medical Holdings |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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