Correlation Between Excelsior Medical and Tait Marketing

Can any of the company-specific risk be diversified away by investing in both Excelsior Medical and Tait Marketing 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 Excelsior Medical and Tait Marketing into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Excelsior Medical Co and Tait Marketing Distribution, you can compare the effects of market volatilities on Excelsior Medical and Tait Marketing 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 Excelsior Medical with a short position of Tait Marketing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Excelsior Medical and Tait Marketing.

Diversification Opportunities for Excelsior Medical and Tait Marketing

-0.01

Correlation Coefficient

Excelsior Medical  Tait Marketing

Good diversification

The 3 months correlation between Excelsior and Tait is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Excelsior Medical Co and Tait Marketing Distribution in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tait Marketing Distr and Excelsior 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 Excelsior Medical Co are associated (or correlated) with Tait Marketing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tait Marketing Distr has no effect on the direction of Excelsior Medical i.e., Excelsior Medical and Tait Marketing go up and down completely randomly.

Pair Corralation between Excelsior Medical and Tait Marketing

Assuming the 90 days trading horizon Excelsior Medical Co is expected to under-perform the Tait Marketing. But the stock apears to be less risky and, when comparing its historical volatility, Excelsior Medical Co is 2.32 times less risky than Tait Marketing. The stock trades about -0.09 of its potential returns per unit of risk. The Tait Marketing Distribution is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  3,975  in Tait Marketing Distribution on September 20, 2024 and sell it today you would earn a total of  5.00  from holding Tait Marketing Distribution or generate 0.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Excelsior Medical Co  vs.  Tait Marketing Distribution

Excelsior Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Excelsior Medical Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Excelsior Medical is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Tait Marketing Distr

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tait Marketing Distribution has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Tait Marketing is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Excelsior Medical and Tait Marketing

The main advantage of trading using opposite Excelsior Medical and Tait Marketing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Excelsior Medical position performs unexpectedly, Tait Marketing 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 Tait Marketing will offset losses from the drop in Tait Marketing's long position.

The idea behind Excelsior Medical Co and Tait Marketing Distribution pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.