Correlation Between Electromed and Danaher

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

By analyzing existing cross correlation between Electromed and Danaher, you can compare the effects of market volatilities on Electromed and Danaher 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 Danaher. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electromed and Danaher.

Diversification Opportunities for Electromed and Danaher

0.53

Correlation Coefficient

Electromed  Danaher

Very weak diversification

The 3 months correlation between Electromed and Danaher is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Electromed and Danaher in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Danaher 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 Danaher. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Danaher has no effect on the direction of Electromed i.e., Electromed and Danaher go up and down completely randomly.

Pair Corralation between Electromed and Danaher

Given the investment horizon of 90 days Electromed is expected to under-perform the Danaher. In addition to that, Electromed is 1.84 times more volatile than Danaher. It trades about -0.11 of its total potential returns per unit of risk. Danaher is currently generating about -0.09 per unit of volatility. If you would invest  22,930  in Danaher on December 30, 2024 and sell it today you would lose (2,345) from holding Danaher or give up 10.23% of portfolio value over 90 days.

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

Electromed  vs.  Danaher

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.

Danaher

Risk-Adjusted Performance

Very Weak

Over the last 90 days Danaher has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's technical indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Electromed and Danaher

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

The idea behind Electromed and Danaher 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.