Correlation Between Eargo, and Bone Biologics

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

By analyzing existing cross correlation between Eargo, Inc and Bone Biologics Corp, you can compare the effects of market volatilities on Eargo, and Bone Biologics 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 Bone Biologics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eargo, and Bone Biologics.

Diversification Opportunities for Eargo, and Bone Biologics

0.34

Correlation Coefficient

Eargo,  Bone Biologics

Weak diversification

The 3 months correlation between Eargo, and Bone is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Eargo, Inc and Bone Biologics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bone Biologics Corp 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 Bone Biologics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bone Biologics Corp has no effect on the direction of Eargo, i.e., Eargo, and Bone Biologics go up and down completely randomly.

Pair Corralation between Eargo, and Bone Biologics

Considering the 90-day investment horizon Eargo, Inc is expected to under-perform the Bone Biologics. But the stock apears to be less risky and, when comparing its historical volatility, Eargo, Inc is 2.0 times less risky than Bone Biologics. The stock trades about -0.11 of its potential returns per unit of risk. The Bone Biologics Corp is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  7,056  in Bone Biologics Corp on September 2, 2024 and sell it today you would lose (6,934) from holding Bone Biologics Corp or give up 98.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	31.05%
Values	Daily Returns

Eargo, Inc  vs.  Bone Biologics Corp

Eargo, Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eargo, Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Eargo, is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Bone Biologics Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bone Biologics Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak essential indicators, Bone Biologics reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eargo, and Bone Biologics

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

The idea behind Eargo, Inc and Bone Biologics Corp 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.