Correlation Between Baxter International and Baumer SA
Can any of the company-specific risk be diversified away by investing in both Baxter International and Baumer SA 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 Baxter International and Baumer SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baxter International and Baumer SA, you can compare the effects of market volatilities on Baxter International and Baumer SA 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 Baxter International with a short position of Baumer SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baxter International and Baumer SA.
Diversification Opportunities for Baxter International and Baumer SA
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Baxter and Baumer is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Baxter International and Baumer SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baumer SA and Baxter International 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 Baxter International are associated (or correlated) with Baumer SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baumer SA has no effect on the direction of Baxter International i.e., Baxter International and Baumer SA go up and down completely randomly.
Pair Corralation between Baxter International and Baumer SA
Assuming the 90 days trading horizon Baxter International is expected to generate 2.63 times less return on investment than Baumer SA. But when comparing it to its historical volatility, Baxter International is 1.31 times less risky than Baumer SA. It trades about 0.14 of its potential returns per unit of risk. Baumer SA is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 1,300 in Baumer SA on October 21, 2024 and sell it today you would earn a total of 100.00 from holding Baumer SA or generate 7.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baxter International vs. Baumer SA
Performance |
| Timeline |
| Baxter International |
| Baumer SA |
Baxter International and Baumer SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baxter International and Baumer SA
The main advantage of trading using opposite Baxter International and Baumer SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baxter International position performs unexpectedly, Baumer SA 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 Baumer SA will offset losses from the drop in Baumer SA's long position.| Baxter International vs. Intuitive Surgical | Baxter International vs. Fleury SA | Baxter International vs. Baumer SA | Baxter International vs. Baumer SA |
| Baumer SA vs. Intuitive Surgical | Baumer SA vs. Baxter International | Baumer SA vs. Fleury SA | Baumer SA vs. Baumer SA |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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