Correlation Between Eargo and Medtronic

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

Diversification Opportunities for Eargo and Medtronic

0.08
  Correlation Coefficient

Significant diversification

The 3 months correlation between Eargo and Medtronic is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Eargo Inc and Medtronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medtronic 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 Medtronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medtronic has no effect on the direction of Eargo i.e., Eargo and Medtronic go up and down completely randomly.

Pair Corralation between Eargo and Medtronic

Considering the 90-day investment horizon Eargo Inc is expected to under-perform the Medtronic. In addition to that, Eargo is 7.89 times more volatile than Medtronic. It trades about -0.03 of its total potential returns per unit of risk. Medtronic is currently generating about -0.11 per unit of volatility. If you would invest  13,199  in Medtronic on June 27, 2022 and sell it today you would lose (4,933)  from holding Medtronic or give up 37.37% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy99.63%
ValuesDaily Returns

Eargo Inc  vs.  Medtronic

 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

Medtronic 
Medtronic Performance
0 of 100
Over the last 90 days Medtronic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Medtronic Price Channel

Eargo and Medtronic Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Eargo and Medtronic

The main advantage of trading using opposite Eargo and Medtronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eargo position performs unexpectedly, Medtronic 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 Medtronic will offset losses from the drop in Medtronic's long position.
Eargo vs. Industrias Bachoco SA
The idea behind Eargo Inc and Medtronic 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.
Medtronic 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.

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