Correlation Between RadNet and Waters
Can any of the company-specific risk be diversified away by investing in both RadNet and Waters 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 Waters into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RadNet Inc and Waters, you can compare the effects of market volatilities on RadNet and Waters 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 Waters. Check out your portfolio center. Please also check ongoing floating volatility patterns of RadNet and Waters.
Diversification Opportunities for RadNet and Waters
Poor diversification
The 3 months correlation between RadNet and Waters is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding RadNet Inc and Waters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waters 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 Waters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waters has no effect on the direction of RadNet i.e., RadNet and Waters go up and down completely randomly.
Pair Corralation between RadNet and Waters
Given the investment horizon of 90 days RadNet Inc is expected to generate 1.12 times more return on investment than Waters. However, RadNet is 1.12 times more volatile than Waters. It trades about 0.12 of its potential returns per unit of risk. Waters is currently generating about 0.07 per unit of risk. If you would invest 6,559 in RadNet Inc on August 28, 2024 and sell it today you would earn a total of 1,588 from holding RadNet Inc or generate 24.21% 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. Waters
Performance |
| Timeline |
| RadNet Inc |
| Waters |
RadNet and Waters Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RadNet and Waters
The main advantage of trading using opposite RadNet and Waters positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RadNet position performs unexpectedly, Waters 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 Waters will offset losses from the drop in Waters' long position.| RadNet vs. Sotera Health Co | RadNet vs. Neogen | RadNet vs. Myriad Genetics | RadNet vs. bioAffinity Technologies Warrant |
| Waters vs. IDEXX Laboratories | Waters vs. IQVIA Holdings | Waters vs. Charles River Laboratories | Waters vs. Revvity |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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