Correlation Between USA Equities and Electromed
Can any of the company-specific risk be diversified away by investing in both USA Equities 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 USA Equities and Electromed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between USA Equities Corp and Electromed, you can compare the effects of market volatilities on USA Equities 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 USA Equities with a short position of Electromed. Check out your portfolio center. Please also check ongoing floating volatility patterns of USA Equities and Electromed.
Diversification Opportunities for USA Equities and Electromed
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between USA and Electromed is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding USA Equities Corp and Electromed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electromed and USA Equities 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 USA Equities Corp 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 USA Equities i.e., USA Equities and Electromed go up and down completely randomly.
Pair Corralation between USA Equities and Electromed
Given the investment horizon of 90 days USA Equities Corp is expected to generate 7.08 times more return on investment than Electromed. However, USA Equities is 7.08 times more volatile than Electromed. It trades about 0.09 of its potential returns per unit of risk. Electromed is currently generating about 0.09 per unit of risk. If you would invest 16.00 in USA Equities Corp on August 29, 2024 and sell it today you would earn a total of 2.00 from holding USA Equities Corp or generate 12.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
USA Equities Corp vs. Electromed
Performance |
| Timeline |
| USA Equities Corp |
| Electromed |
USA Equities and Electromed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with USA Equities and Electromed
The main advantage of trading using opposite USA Equities and Electromed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if USA Equities 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.| USA Equities vs. Brainsway | USA Equities vs. Venus Concept | USA Equities vs. Tactile Systems Technology | USA Equities vs. Icecure Medical |
| Electromed vs. Neuropace | Electromed vs. Orthopediatrics Corp | Electromed vs. SurModics | Electromed vs. Paragon 28 |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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