Correlation Between Baumer SA and Baxter International
Can any of the company-specific risk be diversified away by investing in both Baumer SA 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 Baumer SA and Baxter International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baumer SA and Baxter International, you can compare the effects of market volatilities on Baumer SA 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 Baumer SA with a short position of Baxter International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baumer SA and Baxter International.
Diversification Opportunities for Baumer SA and Baxter International
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Baumer and Baxter is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Baumer SA and Baxter International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baxter International and Baumer SA 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 Baumer SA 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 Baumer SA i.e., Baumer SA and Baxter International go up and down completely randomly.
Pair Corralation between Baumer SA and Baxter International
Assuming the 90 days trading horizon Baumer SA is expected to generate 1.88 times more return on investment than Baxter International. However, Baumer SA is 1.88 times more volatile than Baxter International. It trades about 0.06 of its potential returns per unit of risk. Baxter International is currently generating about 0.02 per unit of risk. If you would invest 1,050 in Baumer SA on August 26, 2024 and sell it today you would earn a total of 238.00 from holding Baumer SA or generate 22.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.43% |
| Values | Daily Returns |
Baumer SA vs. Baxter International
Performance |
| Timeline |
| Baumer SA |
| Baxter International |
Baumer SA and Baxter International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baumer SA and Baxter International
The main advantage of trading using opposite Baumer SA and Baxter International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baumer SA 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.| Baumer SA vs. Intuitive Surgical | Baumer SA vs. Baxter International | Baumer SA vs. Fleury SA | Baumer SA vs. Baumer SA |
| Baxter International vs. Align Technology | Baxter International vs. Bread Financial Holdings | Baxter International vs. Mitsubishi UFJ Financial | Baxter International vs. Palantir Technologies |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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