Correlation Between Tandem Diabetes and Electromed
Can any of the company-specific risk be diversified away by investing in both Tandem Diabetes 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 Tandem Diabetes and Electromed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tandem Diabetes Care and Electromed, you can compare the effects of market volatilities on Tandem Diabetes 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 Tandem Diabetes with a short position of Electromed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tandem Diabetes and Electromed.
Diversification Opportunities for Tandem Diabetes and Electromed
-0.86 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Tandem and Electromed is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Tandem Diabetes Care and Electromed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electromed and Tandem Diabetes 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 Tandem Diabetes Care 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 Tandem Diabetes i.e., Tandem Diabetes and Electromed go up and down completely randomly.
Pair Corralation between Tandem Diabetes and Electromed
Given the investment horizon of 90 days Tandem Diabetes Care is expected to under-perform the Electromed. In addition to that, Tandem Diabetes is 1.21 times more volatile than Electromed. It trades about -0.05 of its total potential returns per unit of risk. Electromed is currently generating about 0.14 per unit of volatility. If you would invest 1,770 in Electromed on September 3, 2024 and sell it today you would earn a total of 1,308 from holding Electromed or generate 73.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tandem Diabetes Care vs. Electromed
Performance |
| Timeline |
| Tandem Diabetes Care |
| Electromed |
Tandem Diabetes and Electromed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tandem Diabetes and Electromed
The main advantage of trading using opposite Tandem Diabetes and Electromed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tandem Diabetes 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.| Tandem Diabetes vs. DexCom Inc | Tandem Diabetes vs. Inspire Medical Systems | Tandem Diabetes vs. Penumbra | Tandem Diabetes vs. Insulet |
| Electromed vs. Tandem Diabetes Care | Electromed vs. Inspire Medical Systems | Electromed vs. Penumbra | Electromed vs. Insulet |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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