Correlation Between NetMed and Xero
Can any of the company-specific risk be diversified away by investing in both NetMed and Xero 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 NetMed and Xero into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NetMed Inc and Xero Limited, you can compare the effects of market volatilities on NetMed and Xero 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 NetMed with a short position of Xero. Check out your portfolio center. Please also check ongoing floating volatility patterns of NetMed and Xero.
Diversification Opportunities for NetMed and Xero
Very good diversification
The 3 months correlation between NetMed and Xero is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding NetMed Inc and Xero Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xero Limited and NetMed 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 NetMed Inc are associated (or correlated) with Xero. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xero Limited has no effect on the direction of NetMed i.e., NetMed and Xero go up and down completely randomly.
Pair Corralation between NetMed and Xero
If you would invest 9,684 in Xero Limited on September 1, 2024 and sell it today you would earn a total of 1,156 from holding Xero Limited or generate 11.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 0.0% |
| Values | Daily Returns |
NetMed Inc vs. Xero Limited
Performance |
| Timeline |
| NetMed Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Xero Limited |
NetMed and Xero Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NetMed and Xero
The main advantage of trading using opposite NetMed and Xero positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NetMed position performs unexpectedly, Xero 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 Xero will offset losses from the drop in Xero's long position.| NetMed vs. Westrock Coffee | NetMed vs. BW Offshore Limited | NetMed vs. Academy Sports Outdoors | NetMed vs. BRP Inc |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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