Correlation Between Prosafe SE and Avanos Medical
Can any of the company-specific risk be diversified away by investing in both Prosafe SE and Avanos Medical 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 Prosafe SE and Avanos Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prosafe SE and Avanos Medical, you can compare the effects of market volatilities on Prosafe SE and Avanos Medical 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 Prosafe SE with a short position of Avanos Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prosafe SE and Avanos Medical.
Diversification Opportunities for Prosafe SE and Avanos Medical
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Prosafe and Avanos is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Prosafe SE and Avanos Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avanos Medical and Prosafe SE 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 Prosafe SE are associated (or correlated) with Avanos Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avanos Medical has no effect on the direction of Prosafe SE i.e., Prosafe SE and Avanos Medical go up and down completely randomly.
Pair Corralation between Prosafe SE and Avanos Medical
Assuming the 90 days horizon Prosafe SE is expected to under-perform the Avanos Medical. In addition to that, Prosafe SE is 1.78 times more volatile than Avanos Medical. It trades about -0.28 of its total potential returns per unit of risk. Avanos Medical is currently generating about 0.01 per unit of volatility. If you would invest 1,820 in Avanos Medical on September 1, 2024 and sell it today you would lose (30.00) from holding Avanos Medical or give up 1.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.24% |
| Values | Daily Returns |
Prosafe SE vs. Avanos Medical
Performance |
| Timeline |
| Prosafe SE |
| Avanos Medical |
Prosafe SE and Avanos Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prosafe SE and Avanos Medical
The main advantage of trading using opposite Prosafe SE and Avanos Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prosafe SE position performs unexpectedly, Avanos Medical 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 Avanos Medical will offset losses from the drop in Avanos Medical's long position.| Prosafe SE vs. Tenaris SA | Prosafe SE vs. Superior Plus Corp | Prosafe SE vs. NMI Holdings | Prosafe SE vs. Origin Agritech |
| Avanos Medical vs. Apple Inc | Avanos Medical vs. Apple Inc | Avanos Medical vs. Apple Inc | Avanos Medical vs. Apple Inc |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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