Correlation Between Medtronic PLC and Electromedical Technologies
Can any of the company-specific risk be diversified away by investing in both Medtronic PLC and Electromedical Technologies 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 Medtronic PLC and Electromedical Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Medtronic PLC and Electromedical Technologies, you can compare the effects of market volatilities on Medtronic PLC and Electromedical Technologies 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 Medtronic PLC with a short position of Electromedical Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medtronic PLC and Electromedical Technologies.
Diversification Opportunities for Medtronic PLC and Electromedical Technologies
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Medtronic and Electromedical is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Medtronic PLC and Electromedical Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electromedical Technologies and Medtronic PLC 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 Medtronic PLC are associated (or correlated) with Electromedical Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electromedical Technologies has no effect on the direction of Medtronic PLC i.e., Medtronic PLC and Electromedical Technologies go up and down completely randomly.
Pair Corralation between Medtronic PLC and Electromedical Technologies
Considering the 90-day investment horizon Medtronic PLC is expected to generate 126.54 times less return on investment than Electromedical Technologies. But when comparing it to its historical volatility, Medtronic PLC is 13.97 times less risky than Electromedical Technologies. It trades about 0.0 of its potential returns per unit of risk. Electromedical Technologies is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 0.10 in Electromedical Technologies on September 20, 2024 and sell it today you would lose (0.07) from holding Electromedical Technologies or give up 70.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Medtronic PLC vs. Electromedical Technologies
Performance |
| Timeline |
| Medtronic PLC |
| Electromedical Technologies |
Medtronic PLC and Electromedical Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Medtronic PLC and Electromedical Technologies
The main advantage of trading using opposite Medtronic PLC and Electromedical Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medtronic PLC position performs unexpectedly, Electromedical Technologies 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 Electromedical Technologies will offset losses from the drop in Electromedical Technologies' long position.| Medtronic PLC vs. Edwards Lifesciences Corp | Medtronic PLC vs. Abbott Laboratories | Medtronic PLC vs. Boston Scientific Corp | Medtronic PLC vs. Zimmer Biomet Holdings |
| Electromedical Technologies vs. Abbott Laboratories | Electromedical Technologies vs. Stryker | Electromedical Technologies vs. Boston Scientific Corp | Electromedical Technologies vs. Medtronic PLC |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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