Correlation Between Avanos Medical and Anika Therapeutics
Can any of the company-specific risk be diversified away by investing in both Avanos Medical and Anika Therapeutics 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 Anika Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avanos Medical and Anika Therapeutics, you can compare the effects of market volatilities on Avanos Medical and Anika Therapeutics 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 Anika Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avanos Medical and Anika Therapeutics.
Diversification Opportunities for Avanos Medical and Anika Therapeutics
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Avanos and Anika is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Avanos Medical and Anika Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anika Therapeutics 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 Anika Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anika Therapeutics has no effect on the direction of Avanos Medical i.e., Avanos Medical and Anika Therapeutics go up and down completely randomly.
Pair Corralation between Avanos Medical and Anika Therapeutics
Given the investment horizon of 90 days Avanos Medical is expected to generate 0.66 times more return on investment than Anika Therapeutics. However, Avanos Medical is 1.51 times less risky than Anika Therapeutics. It trades about -0.13 of its potential returns per unit of risk. Anika Therapeutics is currently generating about -0.2 per unit of risk. If you would invest 2,262 in Avanos Medical on August 28, 2024 and sell it today you would lose (325.00) from holding Avanos Medical or give up 14.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avanos Medical vs. Anika Therapeutics
Performance |
| Timeline |
| Avanos Medical |
| Anika Therapeutics |
Avanos Medical and Anika Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avanos Medical and Anika Therapeutics
The main advantage of trading using opposite Avanos Medical and Anika Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avanos Medical position performs unexpectedly, Anika Therapeutics 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 Anika Therapeutics will offset losses from the drop in Anika Therapeutics' long position.| Avanos Medical vs. Artivion | Avanos Medical vs. Anika Therapeutics | Avanos Medical vs. Sight Sciences | Avanos Medical vs. Orthofix Medical |
| Anika Therapeutics vs. Eliem Therapeutics | Anika Therapeutics vs. HCW Biologics | Anika Therapeutics vs. Scpharmaceuticals | Anika Therapeutics vs. Milestone Pharmaceuticals |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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