Correlation Between AVITA Medical and Wayside Technology
Can any of the company-specific risk be diversified away by investing in both AVITA Medical and Wayside Technology 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 AVITA Medical and Wayside Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AVITA Medical and Wayside Technology Group, you can compare the effects of market volatilities on AVITA Medical and Wayside Technology 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 AVITA Medical with a short position of Wayside Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of AVITA Medical and Wayside Technology.
Diversification Opportunities for AVITA Medical and Wayside Technology
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between AVITA and Wayside is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding AVITA Medical and Wayside Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wayside Technology and AVITA Medical 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 AVITA Medical are associated (or correlated) with Wayside Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wayside Technology has no effect on the direction of AVITA Medical i.e., AVITA Medical and Wayside Technology go up and down completely randomly.
Pair Corralation between AVITA Medical and Wayside Technology
Assuming the 90 days trading horizon AVITA Medical is expected to generate 1.28 times less return on investment than Wayside Technology. In addition to that, AVITA Medical is 1.16 times more volatile than Wayside Technology Group. It trades about 0.18 of its total potential returns per unit of risk. Wayside Technology Group is currently generating about 0.26 per unit of volatility. If you would invest 7,839 in Wayside Technology Group on September 12, 2024 and sell it today you would earn a total of 4,961 from holding Wayside Technology Group or generate 63.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
AVITA Medical vs. Wayside Technology Group
Performance |
| Timeline |
| AVITA Medical |
| Wayside Technology |
AVITA Medical and Wayside Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AVITA Medical and Wayside Technology
The main advantage of trading using opposite AVITA Medical and Wayside Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AVITA Medical position performs unexpectedly, Wayside Technology 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 Wayside Technology will offset losses from the drop in Wayside Technology's long position.| AVITA Medical vs. Apple Inc | AVITA Medical vs. Apple Inc | AVITA Medical vs. Apple Inc | AVITA Medical vs. Apple Inc |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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