Correlation Between EHEALTH and Avanos Medical
Can any of the company-specific risk be diversified away by investing in both EHEALTH and Avanos Medical 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 EHEALTH and Avanos Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EHEALTH and Avanos Medical, you can compare the effects of market volatilities on EHEALTH and Avanos Medical 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 EHEALTH with a short position of Avanos Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of EHEALTH and Avanos Medical.
Diversification Opportunities for EHEALTH and Avanos Medical
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between EHEALTH and Avanos is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding EHEALTH and Avanos Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avanos Medical and EHEALTH 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 EHEALTH are associated (or correlated) with Avanos Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avanos Medical has no effect on the direction of EHEALTH i.e., EHEALTH and Avanos Medical go up and down completely randomly.
Pair Corralation between EHEALTH and Avanos Medical
Assuming the 90 days trading horizon EHEALTH is expected to generate 1.77 times more return on investment than Avanos Medical. However, EHEALTH is 1.77 times more volatile than Avanos Medical. It trades about 0.0 of its potential returns per unit of risk. Avanos Medical is currently generating about 0.0 per unit of risk. If you would invest 692.00 in EHEALTH on September 14, 2024 and sell it today you would lose (157.00) from holding EHEALTH or give up 22.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
EHEALTH vs. Avanos Medical
Performance |
| Timeline |
| EHEALTH |
| Avanos Medical |
EHEALTH and Avanos Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EHEALTH and Avanos Medical
The main advantage of trading using opposite EHEALTH and Avanos Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EHEALTH position performs unexpectedly, Avanos Medical 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 Avanos Medical will offset losses from the drop in Avanos Medical's long position.The idea behind EHEALTH and Avanos Medical 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.| Avanos Medical vs. CARSALESCOM | Avanos Medical vs. GOODYEAR T RUBBER | Avanos Medical vs. Carsales | Avanos Medical vs. NEWELL RUBBERMAID |
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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