Correlation Between Echo Therapeutics and EargoInc

Can any of the company-specific risk be diversified away by investing in both Echo Therapeutics and EargoInc 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 Echo Therapeutics and EargoInc into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Echo Therapeutics and EargoInc, you can compare the effects of market volatilities on Echo Therapeutics and EargoInc 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 Echo Therapeutics with a short position of EargoInc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Echo Therapeutics and EargoInc.

Diversification Opportunities for Echo Therapeutics and EargoInc

0.0

Correlation Coefficient

Echo Therapeutics  EargoInc

Pay attention - limited upside

The 3 months correlation between Echo and EargoInc is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Echo Therapeutics and EargoInc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EargoInc and Echo Therapeutics 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 Echo Therapeutics are associated (or correlated) with EargoInc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EargoInc has no effect on the direction of Echo Therapeutics i.e., Echo Therapeutics and EargoInc go up and down completely randomly.

Pair Corralation between Echo Therapeutics and EargoInc

If you would invest  257.00  in EargoInc on January 25, 2024 and sell it today you would earn a total of  0.00  from holding EargoInc or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Echo Therapeutics  vs.  EargoInc

Echo Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Echo Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Echo Therapeutics is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

EargoInc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EargoInc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady 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 Echo Therapeutics and EargoInc

The main advantage of trading using opposite Echo Therapeutics and EargoInc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Echo Therapeutics position performs unexpectedly, EargoInc 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 EargoInc will offset losses from the drop in EargoInc's long position.

The idea behind Echo Therapeutics and EargoInc 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.