Correlation Between ATI Physical and Baxter International
Can any of the company-specific risk be diversified away by investing in both ATI Physical and Baxter International 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 ATI Physical and Baxter International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ATI Physical Therapy and Baxter International, you can compare the effects of market volatilities on ATI Physical and Baxter International 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 ATI Physical with a short position of Baxter International. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATI Physical and Baxter International.
Diversification Opportunities for ATI Physical and Baxter International
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ATI and Baxter is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding ATI Physical Therapy and Baxter International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baxter International and ATI Physical 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 ATI Physical Therapy are associated (or correlated) with Baxter International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baxter International has no effect on the direction of ATI Physical i.e., ATI Physical and Baxter International go up and down completely randomly.
Pair Corralation between ATI Physical and Baxter International
Given the investment horizon of 90 days ATI Physical Therapy is expected to under-perform the Baxter International. In addition to that, ATI Physical is 2.82 times more volatile than Baxter International. It trades about -0.06 of its total potential returns per unit of risk. Baxter International is currently generating about -0.03 per unit of volatility. If you would invest 4,792 in Baxter International on September 5, 2024 and sell it today you would lose (1,479) from holding Baxter International or give up 30.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ATI Physical Therapy vs. Baxter International
Performance |
| Timeline |
| ATI Physical Therapy |
| Baxter International |
ATI Physical and Baxter International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ATI Physical and Baxter International
The main advantage of trading using opposite ATI Physical and Baxter International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATI Physical position performs unexpectedly, Baxter International 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 Baxter International will offset losses from the drop in Baxter International's long position.| ATI Physical vs. Baxter International | ATI Physical vs. West Pharmaceutical Services | ATI Physical vs. ResMed Inc | ATI Physical vs. ICU Medical |
| Baxter International vs. Embecta Corp | Baxter International vs. West Pharmaceutical Services | Baxter International vs. ResMed Inc | Baxter International vs. The Cooper Companies, |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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