Correlation Between Innovative Eyewear and EDAP TMS
Can any of the company-specific risk be diversified away by investing in both Innovative Eyewear and EDAP TMS 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 Innovative Eyewear and EDAP TMS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innovative Eyewear and EDAP TMS SA, you can compare the effects of market volatilities on Innovative Eyewear and EDAP TMS 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 Innovative Eyewear with a short position of EDAP TMS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovative Eyewear and EDAP TMS.
Diversification Opportunities for Innovative Eyewear and EDAP TMS
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Innovative and EDAP is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Innovative Eyewear and EDAP TMS SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EDAP TMS SA and Innovative Eyewear 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 Innovative Eyewear are associated (or correlated) with EDAP TMS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EDAP TMS SA has no effect on the direction of Innovative Eyewear i.e., Innovative Eyewear and EDAP TMS go up and down completely randomly.
Pair Corralation between Innovative Eyewear and EDAP TMS
Given the investment horizon of 90 days Innovative Eyewear is expected to generate 2.02 times more return on investment than EDAP TMS. However, Innovative Eyewear is 2.02 times more volatile than EDAP TMS SA. It trades about 0.05 of its potential returns per unit of risk. EDAP TMS SA is currently generating about 0.06 per unit of risk. If you would invest 648.00 in Innovative Eyewear on August 24, 2024 and sell it today you would earn a total of 24.00 from holding Innovative Eyewear or generate 3.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Innovative Eyewear vs. EDAP TMS SA
Performance |
| Timeline |
| Innovative Eyewear |
| EDAP TMS SA |
Innovative Eyewear and EDAP TMS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innovative Eyewear and EDAP TMS
The main advantage of trading using opposite Innovative Eyewear and EDAP TMS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovative Eyewear position performs unexpectedly, EDAP TMS 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 EDAP TMS will offset losses from the drop in EDAP TMS's long position.| Innovative Eyewear vs. Teleflex Incorporated | Innovative Eyewear vs. The Cooper Companies, | Innovative Eyewear vs. West Pharmaceutical Services | Innovative Eyewear vs. ICU Medical |
| EDAP TMS vs. Patterson Companies | EDAP TMS vs. Henry Schein | EDAP TMS vs. McKesson | EDAP TMS vs. Cardinal Health |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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