Correlation Between Baxter International and Embecta Corp
Can any of the company-specific risk be diversified away by investing in both Baxter International and Embecta Corp 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 Embecta Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baxter International and Embecta Corp, you can compare the effects of market volatilities on Baxter International and Embecta Corp 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 Embecta Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baxter International and Embecta Corp.
Diversification Opportunities for Baxter International and Embecta Corp
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Baxter and Embecta is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Baxter International and Embecta Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Embecta Corp 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 Embecta Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Embecta Corp has no effect on the direction of Baxter International i.e., Baxter International and Embecta Corp go up and down completely randomly.
Pair Corralation between Baxter International and Embecta Corp
Considering the 90-day investment horizon Baxter International is expected to under-perform the Embecta Corp. But the stock apears to be less risky and, when comparing its historical volatility, Baxter International is 2.05 times less risky than Embecta Corp. The stock trades about -0.03 of its potential returns per unit of risk. The Embecta Corp is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 1,979 in Embecta Corp on August 28, 2024 and sell it today you would lose (538.00) from holding Embecta Corp or give up 27.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baxter International vs. Embecta Corp
Performance |
| Timeline |
| Baxter International |
| Embecta Corp |
Baxter International and Embecta Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baxter International and Embecta Corp
The main advantage of trading using opposite Baxter International and Embecta Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baxter International position performs unexpectedly, Embecta Corp 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 Embecta Corp will offset losses from the drop in Embecta Corp's long position.| Baxter International vs. Embecta Corp | Baxter International vs. West Pharmaceutical Services | Baxter International vs. ResMed Inc | Baxter International vs. The Cooper Companies, |
| Embecta Corp vs. Baxter International | Embecta Corp vs. West Pharmaceutical Services | Embecta Corp vs. ResMed Inc | Embecta Corp 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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