Correlation Between RadNet and Merit Medical
Can any of the company-specific risk be diversified away by investing in both RadNet and Merit 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 RadNet and Merit Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RadNet Inc and Merit Medical Systems, you can compare the effects of market volatilities on RadNet and Merit 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 RadNet with a short position of Merit Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of RadNet and Merit Medical.
Diversification Opportunities for RadNet and Merit Medical
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between RadNet and Merit is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding RadNet Inc and Merit Medical Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merit Medical Systems and RadNet 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 RadNet Inc are associated (or correlated) with Merit Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merit Medical Systems has no effect on the direction of RadNet i.e., RadNet and Merit Medical go up and down completely randomly.
Pair Corralation between RadNet and Merit Medical
Given the investment horizon of 90 days RadNet Inc is expected to generate 3.1 times more return on investment than Merit Medical. However, RadNet is 3.1 times more volatile than Merit Medical Systems. It trades about 0.2 of its potential returns per unit of risk. Merit Medical Systems is currently generating about 0.31 per unit of risk. If you would invest 6,761 in RadNet Inc on August 24, 2024 and sell it today you would earn a total of 1,369 from holding RadNet Inc or generate 20.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
RadNet Inc vs. Merit Medical Systems
Performance |
| Timeline |
| RadNet Inc |
| Merit Medical Systems |
RadNet and Merit Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RadNet and Merit Medical
The main advantage of trading using opposite RadNet and Merit Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RadNet position performs unexpectedly, Merit 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 Merit Medical will offset losses from the drop in Merit Medical's long position.| RadNet vs. Sotera Health Co | RadNet vs. Neogen | RadNet vs. Myriad Genetics | RadNet vs. bioAffinity Technologies Warrant |
| Merit Medical vs. Teleflex Incorporated | Merit Medical vs. The Cooper Companies, | Merit Medical vs. West Pharmaceutical Services | Merit Medical vs. ICU Medical |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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