Correlation Between AVITA Medical and Zimmer Biomet
Can any of the company-specific risk be diversified away by investing in both AVITA Medical and Zimmer Biomet 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 Zimmer Biomet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AVITA Medical and Zimmer Biomet Holdings, you can compare the effects of market volatilities on AVITA Medical and Zimmer Biomet 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 Zimmer Biomet. Check out your portfolio center. Please also check ongoing floating volatility patterns of AVITA Medical and Zimmer Biomet.
Diversification Opportunities for AVITA Medical and Zimmer Biomet
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between AVITA and Zimmer is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding AVITA Medical and Zimmer Biomet Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zimmer Biomet Holdings 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 Zimmer Biomet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zimmer Biomet Holdings has no effect on the direction of AVITA Medical i.e., AVITA Medical and Zimmer Biomet go up and down completely randomly.
Pair Corralation between AVITA Medical and Zimmer Biomet
Assuming the 90 days trading horizon AVITA Medical is expected to generate 3.28 times more return on investment than Zimmer Biomet. However, AVITA Medical is 3.28 times more volatile than Zimmer Biomet Holdings. It trades about 0.05 of its potential returns per unit of risk. Zimmer Biomet Holdings is currently generating about -0.01 per unit of risk. If you would invest 137.00 in AVITA Medical on October 7, 2024 and sell it today you would earn a total of 111.00 from holding AVITA Medical or generate 81.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
AVITA Medical vs. Zimmer Biomet Holdings
Performance |
| Timeline |
| AVITA Medical |
| Zimmer Biomet Holdings |
AVITA Medical and Zimmer Biomet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AVITA Medical and Zimmer Biomet
The main advantage of trading using opposite AVITA Medical and Zimmer Biomet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AVITA Medical position performs unexpectedly, Zimmer Biomet 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 Zimmer Biomet will offset losses from the drop in Zimmer Biomet's long position.| AVITA Medical vs. COLUMBIA SPORTSWEAR | AVITA Medical vs. TITANIUM TRANSPORTGROUP | AVITA Medical vs. Transport International Holdings | AVITA Medical vs. PARKEN Sport Entertainment |
| Zimmer Biomet vs. Summit Materials | Zimmer Biomet vs. COLUMBIA SPORTSWEAR | Zimmer Biomet vs. ANTA SPORTS PRODUCT | Zimmer Biomet vs. NTG Nordic Transport |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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