Correlation Between Treace Medical and Electromed
Can any of the company-specific risk be diversified away by investing in both Treace Medical and Electromed 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 Treace Medical and Electromed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Treace Medical Concepts and Electromed, you can compare the effects of market volatilities on Treace Medical and Electromed 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 Treace Medical with a short position of Electromed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Treace Medical and Electromed.
Diversification Opportunities for Treace Medical and Electromed
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Treace and Electromed is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Treace Medical Concepts and Electromed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electromed and Treace Medical 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 Treace Medical Concepts are associated (or correlated) with Electromed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electromed has no effect on the direction of Treace Medical i.e., Treace Medical and Electromed go up and down completely randomly.
Pair Corralation between Treace Medical and Electromed
Given the investment horizon of 90 days Treace Medical is expected to generate 1.37 times less return on investment than Electromed. In addition to that, Treace Medical is 1.73 times more volatile than Electromed. It trades about 0.09 of its total potential returns per unit of risk. Electromed is currently generating about 0.22 per unit of volatility. If you would invest 1,461 in Electromed on August 31, 2024 and sell it today you would earn a total of 1,617 from holding Electromed or generate 110.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Treace Medical Concepts vs. Electromed
Performance |
| Timeline |
| Treace Medical Concepts |
| Electromed |
Treace Medical and Electromed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Treace Medical and Electromed
The main advantage of trading using opposite Treace Medical and Electromed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Treace Medical position performs unexpectedly, Electromed 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 Electromed will offset losses from the drop in Electromed's long position.| Treace Medical vs. Rxsight | Treace Medical vs. Axogen Inc | Treace Medical vs. Pulmonx Corp | Treace Medical vs. Orthofix Medical |
| Electromed vs. Abbott Laboratories | Electromed vs. Medtronic PLC | Electromed vs. Edwards Lifesciences Corp | Electromed vs. ZimVie 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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