Correlation Between Medirom Healthcare and Patterson Companies
Can any of the company-specific risk be diversified away by investing in both Medirom Healthcare and Patterson Companies 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 Medirom Healthcare and Patterson Companies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Medirom Healthcare Technologies and Patterson Companies, you can compare the effects of market volatilities on Medirom Healthcare and Patterson Companies 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 Medirom Healthcare with a short position of Patterson Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medirom Healthcare and Patterson Companies.
Diversification Opportunities for Medirom Healthcare and Patterson Companies
-0.95 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Medirom and Patterson is -0.95. Overlapping area represents the amount of risk that can be diversified away by holding Medirom Healthcare Technologie and Patterson Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patterson Companies and Medirom Healthcare 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 Medirom Healthcare Technologies are associated (or correlated) with Patterson Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patterson Companies has no effect on the direction of Medirom Healthcare i.e., Medirom Healthcare and Patterson Companies go up and down completely randomly.
Pair Corralation between Medirom Healthcare and Patterson Companies
Considering the 90-day investment horizon Medirom Healthcare Technologies is expected to under-perform the Patterson Companies. In addition to that, Medirom Healthcare is 3.31 times more volatile than Patterson Companies. It trades about -0.02 of its total potential returns per unit of risk. Patterson Companies is currently generating about 0.02 per unit of volatility. If you would invest 2,922 in Patterson Companies on October 25, 2024 and sell it today you would earn a total of 169.50 from holding Patterson Companies or generate 5.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Medirom Healthcare Technologie vs. Patterson Companies
Performance |
| Timeline |
| Medirom Healthcare |
| Patterson Companies |
Medirom Healthcare and Patterson Companies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Medirom Healthcare and Patterson Companies
The main advantage of trading using opposite Medirom Healthcare and Patterson Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medirom Healthcare position performs unexpectedly, Patterson Companies 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 Patterson Companies will offset losses from the drop in Patterson Companies' long position.| Medirom Healthcare vs. HR Block | Medirom Healthcare vs. Service International | Medirom Healthcare vs. Rollins | Medirom Healthcare vs. WW International |
| Patterson Companies vs. Owens Minor | Patterson Companies vs. Cardinal Health | Patterson Companies vs. McKesson | Patterson Companies vs. Henry Schein |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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