Correlation Between Solventum Corp and EGF Theramed
Can any of the company-specific risk be diversified away by investing in both Solventum Corp and EGF Theramed 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 Solventum Corp and EGF Theramed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solventum Corp and EGF Theramed Health, you can compare the effects of market volatilities on Solventum Corp and EGF Theramed 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 Solventum Corp with a short position of EGF Theramed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solventum Corp and EGF Theramed.
Diversification Opportunities for Solventum Corp and EGF Theramed
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Solventum and EGF is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Solventum Corp and EGF Theramed Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EGF Theramed Health and Solventum Corp 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 Solventum Corp are associated (or correlated) with EGF Theramed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EGF Theramed Health has no effect on the direction of Solventum Corp i.e., Solventum Corp and EGF Theramed go up and down completely randomly.
Pair Corralation between Solventum Corp and EGF Theramed
Given the investment horizon of 90 days Solventum Corp is expected to under-perform the EGF Theramed. But the stock apears to be less risky and, when comparing its historical volatility, Solventum Corp is 15.18 times less risky than EGF Theramed. The stock trades about -0.02 of its potential returns per unit of risk. The EGF Theramed Health is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 36.00 in EGF Theramed Health on August 30, 2024 and sell it today you would lose (15.00) from holding EGF Theramed Health or give up 41.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 34.95% |
| Values | Daily Returns |
Solventum Corp vs. EGF Theramed Health
Performance |
| Timeline |
| Solventum Corp |
| EGF Theramed Health |
Solventum Corp and EGF Theramed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solventum Corp and EGF Theramed
The main advantage of trading using opposite Solventum Corp and EGF Theramed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solventum Corp position performs unexpectedly, EGF Theramed 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 EGF Theramed will offset losses from the drop in EGF Theramed's long position.| Solventum Corp vs. NRG Energy | Solventum Corp vs. Ziff Davis | Solventum Corp vs. Iridium Communications | Solventum Corp vs. Digi International |
| EGF Theramed vs. Reliq Health Technologies | EGF Theramed vs. Healthcare Triangle | EGF Theramed vs. Bullfrog AI Holdings, | EGF Theramed vs. Mednow 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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