Correlation Between 278642AZ6 and RadNet

Can any of the company-specific risk be diversified away by investing in both 278642AZ6 and RadNet 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 278642AZ6 and RadNet into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between EBAY INC and RadNet Inc, you can compare the effects of market volatilities on 278642AZ6 and RadNet 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 278642AZ6 with a short position of RadNet. Check out your portfolio center. Please also check ongoing floating volatility patterns of 278642AZ6 and RadNet.

Diversification Opportunities for 278642AZ6 and RadNet

-0.53

Correlation Coefficient

278642AZ6  RadNet

Excellent diversification

The 3 months correlation between 278642AZ6 and RadNet is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding EBAY INC and RadNet Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RadNet Inc and 278642AZ6 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 EBAY INC are associated (or correlated) with RadNet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RadNet Inc has no effect on the direction of 278642AZ6 i.e., 278642AZ6 and RadNet go up and down completely randomly.

Pair Corralation between 278642AZ6 and RadNet

Assuming the 90 days trading horizon EBAY INC is expected to generate 20.25 times more return on investment than RadNet. However, 278642AZ6 is 20.25 times more volatile than RadNet Inc. It trades about 0.05 of its potential returns per unit of risk. RadNet Inc is currently generating about 0.12 per unit of risk. If you would invest  7,699  in EBAY INC on September 4, 2024 and sell it today you would lose (274.00) from holding EBAY INC or give up 3.56% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	76.97%
Values	Daily Returns

EBAY INC  vs.  RadNet Inc

278642AZ6

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EBAY INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 278642AZ6 is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

RadNet Inc

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in RadNet Inc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, RadNet unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with 278642AZ6 and RadNet

The main advantage of trading using opposite 278642AZ6 and RadNet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 278642AZ6 position performs unexpectedly, RadNet 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 RadNet will offset losses from the drop in RadNet's long position.

The idea behind EBAY INC and RadNet Inc 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.