Correlation Between Neuronetics and ENDRA Life

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

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

Diversification Opportunities for Neuronetics and ENDRA Life

0.15

Correlation Coefficient

Neuronetics  ENDRA Life

Average diversification

The 3 months correlation between Neuronetics and ENDRA is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Neuronetics and ENDRA Life Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENDRA Life Sciences and Neuronetics 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 Neuronetics are associated (or correlated) with ENDRA Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENDRA Life Sciences has no effect on the direction of Neuronetics i.e., Neuronetics and ENDRA Life go up and down completely randomly.

Pair Corralation between Neuronetics and ENDRA Life

Given the investment horizon of 90 days Neuronetics is expected to generate 0.6 times more return on investment than ENDRA Life. However, Neuronetics is 1.66 times less risky than ENDRA Life. It trades about 0.07 of its potential returns per unit of risk. ENDRA Life Sciences is currently generating about -0.04 per unit of risk. If you would invest  87.00  in Neuronetics on September 2, 2024 and sell it today you would earn a total of  13.00  from holding Neuronetics or generate 14.94% return on investment over 90 days.

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

Neuronetics  vs.  ENDRA Life Sciences

Neuronetics

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Neuronetics are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward indicators, Neuronetics displayed solid returns over the last few months and may actually be approaching a breakup point.

ENDRA Life Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ENDRA Life Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Neuronetics and ENDRA Life

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

The idea behind Neuronetics and ENDRA Life Sciences 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.

Check out your portfolio center.

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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.