Correlation Between Electrocore LLC and Heartbeam Warrant

Can any of the company-specific risk be diversified away by investing in both Electrocore LLC and Heartbeam Warrant 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 Electrocore LLC and Heartbeam Warrant into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Electrocore LLC and Heartbeam Warrant, you can compare the effects of market volatilities on Electrocore LLC and Heartbeam Warrant 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 Electrocore LLC with a short position of Heartbeam Warrant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electrocore LLC and Heartbeam Warrant.

Diversification Opportunities for Electrocore LLC and Heartbeam Warrant

0.82

Correlation Coefficient

Electrocore LLC  Heartbeam Warrant

Very poor diversification

The 3 months correlation between Electrocore and Heartbeam is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Electrocore LLC and Heartbeam Warrant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heartbeam Warrant and Electrocore LLC 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 Electrocore LLC are associated (or correlated) with Heartbeam Warrant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heartbeam Warrant has no effect on the direction of Electrocore LLC i.e., Electrocore LLC and Heartbeam Warrant go up and down completely randomly.

Pair Corralation between Electrocore LLC and Heartbeam Warrant

Given the investment horizon of 90 days Electrocore LLC is expected to generate 0.8 times more return on investment than Heartbeam Warrant. However, Electrocore LLC is 1.25 times less risky than Heartbeam Warrant. It trades about 0.42 of its potential returns per unit of risk. Heartbeam Warrant is currently generating about 0.13 per unit of risk. If you would invest  965.00  in Electrocore LLC on September 19, 2024 and sell it today you would earn a total of  694.00  from holding Electrocore LLC or generate 71.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.45%
Values	Daily Returns

Electrocore LLC  vs.  Heartbeam Warrant

Electrocore LLC

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Electrocore LLC are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, Electrocore LLC reported solid returns over the last few months and may actually be approaching a breakup point.

Heartbeam Warrant

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Heartbeam Warrant are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, Heartbeam Warrant showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Electrocore LLC and Heartbeam Warrant

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

The idea behind Electrocore LLC and Heartbeam Warrant 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.

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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.