Correlation Between Chemed Corp and Laboratory
Can any of the company-specific risk be diversified away by investing in both Chemed Corp and Laboratory 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 Chemed Corp and Laboratory into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chemed Corp and Laboratory of, you can compare the effects of market volatilities on Chemed Corp and Laboratory 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 Chemed Corp with a short position of Laboratory. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chemed Corp and Laboratory.
Diversification Opportunities for Chemed Corp and Laboratory
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Chemed and Laboratory is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Chemed Corp and Laboratory of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laboratory and Chemed Corp 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 Chemed Corp are associated (or correlated) with Laboratory. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laboratory has no effect on the direction of Chemed Corp i.e., Chemed Corp and Laboratory go up and down completely randomly.
Pair Corralation between Chemed Corp and Laboratory
Considering the 90-day investment horizon Chemed Corp is expected to generate 0.9 times more return on investment than Laboratory. However, Chemed Corp is 1.12 times less risky than Laboratory. It trades about 0.04 of its potential returns per unit of risk. Laboratory of is currently generating about 0.01 per unit of risk. If you would invest 49,894 in Chemed Corp on January 25, 2024 and sell it today you would earn a total of 11,757 from holding Chemed Corp or generate 23.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chemed Corp vs. Laboratory of
Performance |
| Timeline |
| Chemed Corp |
| Laboratory |
Chemed Corp and Laboratory Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chemed Corp and Laboratory
The main advantage of trading using opposite Chemed Corp and Laboratory positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chemed Corp position performs unexpectedly, Laboratory 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 Laboratory will offset losses from the drop in Laboratory's long position.| Chemed Corp vs. Select Medical Holdings | Chemed Corp vs. Encompass Health Corp | Chemed Corp vs. Pennant Group | Chemed Corp vs. Acadia Healthcare |
| Laboratory vs. Aclaris Therapeutics | Laboratory vs. Castle Biosciences | Laboratory vs. Prenetics Global | Laboratory vs. DarioHealth Corp |
Check out your portfolio center.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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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