Correlation Between Baxter International and Fleury SA
Can any of the company-specific risk be diversified away by investing in both Baxter International and Fleury 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 Fleury 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 Fleury SA, you can compare the effects of market volatilities on Baxter International and Fleury 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 Fleury SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baxter International and Fleury SA.
Diversification Opportunities for Baxter International and Fleury SA
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Baxter and Fleury is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Baxter International and Fleury SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fleury 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 Fleury SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fleury SA has no effect on the direction of Baxter International i.e., Baxter International and Fleury SA go up and down completely randomly.
Pair Corralation between Baxter International and Fleury SA
Assuming the 90 days trading horizon Baxter International is expected to generate 0.89 times more return on investment than Fleury SA. However, Baxter International is 1.13 times less risky than Fleury SA. It trades about -0.17 of its potential returns per unit of risk. Fleury SA is currently generating about -0.18 per unit of risk. If you would invest 10,400 in Baxter International on August 30, 2024 and sell it today you would lose (670.00) from holding Baxter International or give up 6.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 90.48% |
| Values | Daily Returns |
Baxter International vs. Fleury SA
Performance |
| Timeline |
| Baxter International |
| Fleury SA |
Baxter International and Fleury SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baxter International and Fleury SA
The main advantage of trading using opposite Baxter International and Fleury SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baxter International position performs unexpectedly, Fleury 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 Fleury SA will offset losses from the drop in Fleury SA's long position.| Baxter International vs. Fleury SA | Baxter International vs. Baumer SA | Baxter International vs. Energisa SA | Baxter International vs. BTG Pactual Logstica |
| Fleury SA vs. Engie Brasil Energia | Fleury SA vs. WEG SA | Fleury SA vs. Ambev SA | Fleury SA vs. M Dias Branco |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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