Correlation Between Rushnet and Neuronetics

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

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

Diversification Opportunities for Rushnet and Neuronetics

-0.21

Correlation Coefficient

Rushnet  Neuronetics

Very good diversification

The 3 months correlation between Rushnet and Neuronetics is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Rushnet and Neuronetics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neuronetics and Rushnet 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 Rushnet are associated (or correlated) with Neuronetics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neuronetics has no effect on the direction of Rushnet i.e., Rushnet and Neuronetics go up and down completely randomly.

Pair Corralation between Rushnet and Neuronetics

Given the investment horizon of 90 days Rushnet is expected to generate 5.06 times more return on investment than Neuronetics. However, Rushnet is 5.06 times more volatile than Neuronetics. It trades about 0.12 of its potential returns per unit of risk. Neuronetics is currently generating about 0.07 per unit of risk. If you would invest  0.03  in Rushnet on September 17, 2024 and sell it today you would lose (0.02) from holding Rushnet or give up 66.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Rushnet  vs.  Neuronetics

Rushnet

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Rushnet are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical indicators, Rushnet displayed solid returns over the last few months and may actually be approaching a breakup point.

Neuronetics

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Neuronetics are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting forward indicators, Neuronetics displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rushnet and Neuronetics

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

The idea behind Rushnet and Neuronetics 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..