Correlation Between Eargo and Bio-Rad Laboratories

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Can any of the company-specific risk be diversified away by investing in both Eargo and Bio-Rad Laboratories 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 Eargo and Bio-Rad Laboratories into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eargo Inc and Bio-Rad Laboratories, you can compare the effects of market volatilities on Eargo and Bio-Rad Laboratories 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 Eargo with a short position of Bio-Rad Laboratories. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eargo and Bio-Rad Laboratories.

Diversification Opportunities for Eargo and Bio-Rad Laboratories

-0.23
  Correlation Coefficient

Very good diversification

The 3 months correlation between Eargo and Bio-Rad is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Eargo Inc and Bio-Rad Laboratories in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bio-Rad Laboratories and Eargo 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 Eargo Inc are associated (or correlated) with Bio-Rad Laboratories. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bio-Rad Laboratories has no effect on the direction of Eargo i.e., Eargo and Bio-Rad Laboratories go up and down completely randomly.

Pair Corralation between Eargo and Bio-Rad Laboratories

Considering the 90-day investment horizon Eargo Inc is expected to under-perform the Bio-Rad Laboratories. In addition to that, Eargo is 4.88 times more volatile than Bio-Rad Laboratories. It trades about -0.01 of its total potential returns per unit of risk. Bio-Rad Laboratories is currently generating about -0.01 per unit of volatility. If you would invest  53,066  in Bio-Rad Laboratories on June 27, 2022 and sell it today you would lose (10,873)  from holding Bio-Rad Laboratories or give up 20.49% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy98.39%
ValuesDaily Returns

Eargo Inc  vs.  Bio-Rad Laboratories

 Performance (%) 
       Timeline  
Eargo Inc 
Eargo Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Eargo Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Eargo reported solid returns over the last few months and may actually be approaching a breakup point.

Eargo Price Channel

Bio-Rad Laboratories 
Bio-Rad Performance
0 of 100
Over the last 90 days Bio-Rad Laboratories has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain quite persistent which may send shares a bit higher in October 2022. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Bio-Rad Price Channel

Eargo and Bio-Rad Laboratories Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Eargo and Bio-Rad Laboratories

The main advantage of trading using opposite Eargo and Bio-Rad Laboratories positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eargo position performs unexpectedly, Bio-Rad Laboratories 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 Bio-Rad Laboratories will offset losses from the drop in Bio-Rad Laboratories' long position.
Eargo vs. Industrias Bachoco SA
The idea behind Eargo Inc and Bio-Rad Laboratories 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.
Bio-Rad Laboratories vs. Industrias Bachoco SA
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 Focused Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.

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