Correlation Between Baxter International and Electrocore LLC
Can any of the company-specific risk be diversified away by investing in both Baxter International and Electrocore LLC 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 Baxter International and Electrocore LLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baxter International and Electrocore LLC, you can compare the effects of market volatilities on Baxter International and Electrocore LLC 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 Baxter International with a short position of Electrocore LLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baxter International and Electrocore LLC.
Diversification Opportunities for Baxter International and Electrocore LLC
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Baxter and Electrocore is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Baxter International and Electrocore LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electrocore LLC and Baxter International 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 Baxter International are associated (or correlated) with Electrocore LLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electrocore LLC has no effect on the direction of Baxter International i.e., Baxter International and Electrocore LLC go up and down completely randomly.
Pair Corralation between Baxter International and Electrocore LLC
Considering the 90-day investment horizon Baxter International is expected to generate 0.49 times more return on investment than Electrocore LLC. However, Baxter International is 2.05 times less risky than Electrocore LLC. It trades about -0.04 of its potential returns per unit of risk. Electrocore LLC is currently generating about -0.13 per unit of risk. If you would invest 4,154 in Baxter International on January 26, 2024 and sell it today you would lose (61.00) from holding Baxter International or give up 1.47% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Baxter International vs. Electrocore LLC
Performance |
Timeline |
Baxter International |
Electrocore LLC |
Baxter International and Electrocore LLC Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Baxter International and Electrocore LLC
The main advantage of trading using opposite Baxter International and Electrocore LLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baxter International position performs unexpectedly, Electrocore LLC 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 Electrocore LLC will offset losses from the drop in Electrocore LLC's long position.Baxter International vs. Embecta Corp | Baxter International vs. West Pharmaceutical Services | Baxter International vs. ResMed Inc | Baxter International vs. The Cooper Companies |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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