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

Baxter International  Electrocore LLC

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 -0.05 of its potential returns per unit of risk. Electrocore LLC is currently generating about -0.09 per unit of risk. If you would invest  4,179  in Baxter International on January 25, 2024 and sell it today you would lose (77.00) from holding Baxter International or give up 1.84% 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

Baxter International

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Baxter International are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Baxter International may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Electrocore LLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Electrocore LLC has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in May 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

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.

The idea behind Baxter International and Electrocore LLC 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..