Correlation Between United States and RadNet

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

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

Diversification Opportunities for United States and RadNet

0.46

Correlation Coefficient

United States  RadNet

Very weak diversification

The 3 months correlation between United and RadNet is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and RadNet Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RadNet Inc and United States 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 United States Steel are associated (or correlated) with RadNet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RadNet Inc has no effect on the direction of United States i.e., United States and RadNet go up and down completely randomly.

Pair Corralation between United States and RadNet

Taking into account the 90-day investment horizon United States is expected to generate 12.93 times less return on investment than RadNet. But when comparing it to its historical volatility, United States Steel is 1.33 times less risky than RadNet. It trades about 0.02 of its potential returns per unit of risk. RadNet Inc is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  6,709  in RadNet Inc on August 28, 2024 and sell it today you would earn a total of  1,438  from holding RadNet Inc or generate 21.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

United States Steel  vs.  RadNet Inc

United States Steel

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in United States Steel are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, United States may actually be approaching a critical reversion point that can send shares even higher in December 2024.

RadNet Inc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in RadNet Inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, RadNet unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with United States and RadNet

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

The idea behind United States Steel and RadNet Inc 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.