Correlation Between Echo Therapeutics and Medtronic PLC

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

Diversification Opportunities for Echo Therapeutics and Medtronic PLC

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  Correlation Coefficient

Pay attention - limited upside

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

Pair Corralation between Echo Therapeutics and Medtronic PLC

If you would invest  8,315  in Medtronic PLC on December 29, 2023 and sell it today you would earn a total of  377.00  from holding Medtronic PLC or generate 4.53% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

Echo Therapeutics  vs.  Medtronic PLC

 Performance 
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Echo Therapeutics 

Risk-Adjusted Performance

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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 recent stock price tumult, may contribute to shorter-term losses for the shareholders.
Medtronic PLC 

Risk-Adjusted Performance

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Compared to the overall equity markets, risk-adjusted returns on investments in Medtronic PLC are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal fundamental indicators, Medtronic PLC may actually be approaching a critical reversion point that can send shares even higher in April 2024.

Echo Therapeutics and Medtronic PLC Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Echo Therapeutics and Medtronic PLC

The main advantage of trading using opposite Echo Therapeutics and Medtronic PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Echo Therapeutics position performs unexpectedly, Medtronic PLC 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 PLC will offset losses from the drop in Medtronic PLC's long position.
The idea behind Echo Therapeutics and Medtronic PLC 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.

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