Correlation Between Cerner and Icad

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

Diversification Opportunities for Cerner and Icad

0.26
  Correlation Coefficient

Modest diversification

The 3 months correlation between Cerner and Icad is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Cerner Corp. and Icad Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icad Inc and Cerner 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 Cerner are associated (or correlated) with Icad. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icad Inc has no effect on the direction of Cerner i.e., Cerner and Icad go up and down completely randomly.

Pair Corralation between Cerner and Icad

Given the investment horizon of 90 days Cerner is expected to generate 12.91 times less return on investment than Icad. But when comparing it to its historical volatility, Cerner is 24.7 times less risky than Icad. It trades about 0.11 of its potential returns per unit of risk. Icad Inc is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  367.00  in Icad Inc on April 4, 2022 and sell it today you would earn a total of  28.00  from holding Icad Inc or generate 7.63% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy61.9%
ValuesDaily Returns

Cerner Corp.  vs.  Icad Inc

 Performance (%) 
      Timeline 
Cerner 
Cerner Performance
0 of 100
Over the last 90 days Cerner has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Cerner is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.
Icad Inc 
Icad Performance
0 of 100
Over the last 90 days Icad Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Icad is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Structure and Payout Changes

Last Split Factor
1:5
Last Split Date
2012-08-16

Icad Price Channel

Cerner and Icad Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Cerner and Icad

The main advantage of trading using opposite Cerner and Icad positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cerner position performs unexpectedly, Icad 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 Icad will offset losses from the drop in Icad's long position.
The idea behind Cerner and Icad 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.
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

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