Correlation Between RadNet and Solventum Corp

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

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

Diversification Opportunities for RadNet and Solventum Corp

-0.05

Correlation Coefficient

RadNet  Solventum Corp

Good diversification

The 3 months correlation between RadNet and Solventum is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding RadNet Inc and Solventum Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solventum Corp and RadNet 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 RadNet Inc are associated (or correlated) with Solventum Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solventum Corp has no effect on the direction of RadNet i.e., RadNet and Solventum Corp go up and down completely randomly.

Pair Corralation between RadNet and Solventum Corp

Given the investment horizon of 90 days RadNet Inc is expected to generate 1.26 times more return on investment than Solventum Corp. However, RadNet is 1.26 times more volatile than Solventum Corp. It trades about 0.12 of its potential returns per unit of risk. Solventum Corp is currently generating about -0.02 per unit of risk. If you would invest  3,054  in RadNet Inc on September 12, 2024 and sell it today you would earn a total of  4,838  from holding RadNet Inc or generate 158.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	54.68%
Values	Daily Returns

RadNet Inc  vs.  Solventum Corp

RadNet Inc

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in RadNet Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, RadNet unveiled solid returns over the last few months and may actually be approaching a breakup point.

Solventum Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Solventum Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable essential indicators, Solventum Corp is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with RadNet and Solventum Corp

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

The idea behind RadNet Inc and Solventum 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.