Correlation Between Electromed and Cross Country

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

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

Diversification Opportunities for Electromed and Cross Country

0.85

Correlation Coefficient

Electromed  Cross Country

Very poor diversification

The 3 months correlation between Electromed and Cross is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Electromed and Cross Country Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cross Country Healthcare and Electromed 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 Electromed are associated (or correlated) with Cross Country. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cross Country Healthcare has no effect on the direction of Electromed i.e., Electromed and Cross Country go up and down completely randomly.

Pair Corralation between Electromed and Cross Country

Given the investment horizon of 90 days Electromed is expected to under-perform the Cross Country. In addition to that, Electromed is 2.83 times more volatile than Cross Country Healthcare. It trades about -0.11 of its total potential returns per unit of risk. Cross Country Healthcare is currently generating about -0.25 per unit of volatility. If you would invest  1,806  in Cross Country Healthcare on December 29, 2024 and sell it today you would lose (306.00) from holding Cross Country Healthcare or give up 16.94% of portfolio value over 90 days.

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

Electromed  vs.  Cross Country Healthcare

Electromed

Risk-Adjusted Performance

Very Weak

Over the last 90 days Electromed has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's primary indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Cross Country Healthcare

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cross Country Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Electromed and Cross Country

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

The idea behind Electromed and Cross Country Healthcare 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.