Correlation Between NuVasive and Electromed

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

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

Diversification Opportunities for NuVasive and Electromed

0.05

Correlation Coefficient

NuVasive  Electromed

Significant diversification

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

Pair Corralation between NuVasive and Electromed

If you would invest  1,725  in Electromed on September 1, 2024 and sell it today you would earn a total of  1,353  from holding Electromed or generate 78.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

NuVasive  vs.  Electromed

NuVasive

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NuVasive has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, NuVasive is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Electromed

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Electromed are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile primary indicators, Electromed exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NuVasive and Electromed

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

The idea behind NuVasive and Electromed 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.