Correlation Between RadNet and Metalink
Can any of the company-specific risk be diversified away by investing in both RadNet and Metalink 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 Metalink into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RadNet Inc and Metalink, you can compare the effects of market volatilities on RadNet and Metalink 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 Metalink. Check out your portfolio center. Please also check ongoing floating volatility patterns of RadNet and Metalink.
Diversification Opportunities for RadNet and Metalink
Poor diversification
The 3 months correlation between RadNet and Metalink is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding RadNet Inc and Metalink in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metalink 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 Metalink. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metalink has no effect on the direction of RadNet i.e., RadNet and Metalink go up and down completely randomly.
Pair Corralation between RadNet and Metalink
Given the investment horizon of 90 days RadNet is expected to generate 9.67 times less return on investment than Metalink. But when comparing it to its historical volatility, RadNet Inc is 23.49 times less risky than Metalink. It trades about 0.13 of its potential returns per unit of risk. Metalink is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 59.00 in Metalink on September 2, 2024 and sell it today you would lose (16.00) from holding Metalink or give up 27.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
RadNet Inc vs. Metalink
Performance |
| Timeline |
| RadNet Inc |
| Metalink |
RadNet and Metalink Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RadNet and Metalink
The main advantage of trading using opposite RadNet and Metalink positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RadNet position performs unexpectedly, Metalink 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 Metalink will offset losses from the drop in Metalink's long position.| RadNet vs. Sotera Health Co | RadNet vs. Neogen | RadNet vs. Myriad Genetics | RadNet vs. bioAffinity Technologies Warrant |
| Metalink vs. Eastern Co | Metalink vs. Commonwealth Bank of | Metalink vs. Merit Medical Systems | Metalink vs. Encore Capital Group |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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