Correlation Between Avanos Medical and United States
Can any of the company-specific risk be diversified away by investing in both Avanos Medical and United States 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 Avanos Medical and United States into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avanos Medical and United States Steel, you can compare the effects of market volatilities on Avanos Medical and United States 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 Avanos Medical with a short position of United States. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avanos Medical and United States.
Diversification Opportunities for Avanos Medical and United States
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Avanos and United is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Avanos Medical and United States Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States Steel and Avanos 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 Avanos Medical are associated (or correlated) with United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States Steel has no effect on the direction of Avanos Medical i.e., Avanos Medical and United States go up and down completely randomly.
Pair Corralation between Avanos Medical and United States
Assuming the 90 days trading horizon Avanos Medical is expected to generate 0.73 times more return on investment than United States. However, Avanos Medical is 1.36 times less risky than United States. It trades about -0.11 of its potential returns per unit of risk. United States Steel is currently generating about -0.17 per unit of risk. If you would invest 1,870 in Avanos Medical on September 13, 2024 and sell it today you would lose (110.00) from holding Avanos Medical or give up 5.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avanos Medical vs. United States Steel
Performance |
| Timeline |
| Avanos Medical |
| United States Steel |
Avanos Medical and United States Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avanos Medical and United States
The main advantage of trading using opposite Avanos Medical and United States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avanos Medical position performs unexpectedly, United States 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 United States will offset losses from the drop in United States' long position.| Avanos Medical vs. HF FOODS GRP | Avanos Medical vs. Performance Food Group | Avanos Medical vs. Summit Hotel Properties | Avanos Medical vs. INDOFOOD AGRI RES |
| United States vs. ArcelorMittal | United States vs. NIPPON STEEL SPADR | United States vs. Reliance Steel Aluminum | United States vs. Superior Plus Corp |
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.
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