Correlation Between Icad and Profound Medical

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

By analyzing existing cross correlation between icad inc and Profound Medical Corp, you can compare the effects of market volatilities on Icad and Profound Medical 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 Icad with a short position of Profound Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Icad and Profound Medical.

Diversification Opportunities for Icad and Profound Medical

0.05

Correlation Coefficient

Icad  Profound Medical

Significant diversification

The 3 months correlation between Icad and Profound is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding icad inc and Profound Medical Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Profound Medical Corp and Icad 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 icad inc are associated (or correlated) with Profound Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Profound Medical Corp has no effect on the direction of Icad i.e., Icad and Profound Medical go up and down completely randomly.

Pair Corralation between Icad and Profound Medical

Given the investment horizon of 90 days icad inc is expected to generate 1.96 times more return on investment than Profound Medical. However, Icad is 1.96 times more volatile than Profound Medical Corp. It trades about 0.06 of its potential returns per unit of risk. Profound Medical Corp is currently generating about 0.04 per unit of risk. If you would invest  151.00  in icad inc on September 5, 2024 and sell it today you would earn a total of  19.00  from holding icad inc or generate 12.58% return on investment over 90 days.

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

icad inc  vs.  Profound Medical Corp

icad inc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in icad inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Icad exhibited solid returns over the last few months and may actually be approaching a breakup point.

Profound Medical Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Profound Medical Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Profound Medical may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Icad and Profound Medical

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

The idea behind icad inc and Profound Medical Corp 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.