Correlation Between Baxter International and InfuSystems Holdings
Can any of the company-specific risk be diversified away by investing in both Baxter International and InfuSystems Holdings 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 InfuSystems Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baxter International and InfuSystems Holdings, you can compare the effects of market volatilities on Baxter International and InfuSystems Holdings 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 InfuSystems Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baxter International and InfuSystems Holdings.
Diversification Opportunities for Baxter International and InfuSystems Holdings
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Baxter and InfuSystems is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Baxter International and InfuSystems Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InfuSystems Holdings 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 InfuSystems Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InfuSystems Holdings has no effect on the direction of Baxter International i.e., Baxter International and InfuSystems Holdings go up and down completely randomly.
Pair Corralation between Baxter International and InfuSystems Holdings
Considering the 90-day investment horizon Baxter International is expected to under-perform the InfuSystems Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Baxter International is 3.03 times less risky than InfuSystems Holdings. The stock trades about -0.21 of its potential returns per unit of risk. The InfuSystems Holdings is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 642.00 in InfuSystems Holdings on August 28, 2024 and sell it today you would earn a total of 283.00 from holding InfuSystems Holdings or generate 44.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baxter International vs. InfuSystems Holdings
Performance |
| Timeline |
| Baxter International |
| InfuSystems Holdings |
Baxter International and InfuSystems Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baxter International and InfuSystems Holdings
The main advantage of trading using opposite Baxter International and InfuSystems Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baxter International position performs unexpectedly, InfuSystems Holdings 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 InfuSystems Holdings will offset losses from the drop in InfuSystems Holdings' long position.| Baxter International vs. Embecta Corp | Baxter International vs. West Pharmaceutical Services | Baxter International vs. ResMed Inc | Baxter International vs. The Cooper Companies, |
| InfuSystems Holdings vs. Electromed | InfuSystems Holdings vs. Issuer Direct Corp | InfuSystems Holdings vs. IRIDEX | InfuSystems Holdings vs. Milestone Scientific |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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