Correlation Between Baxter International and Viemed Healthcare
Can any of the company-specific risk be diversified away by investing in both Baxter International and Viemed Healthcare 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 Viemed Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baxter International and Viemed Healthcare, you can compare the effects of market volatilities on Baxter International and Viemed Healthcare 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 Viemed Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baxter International and Viemed Healthcare.
Diversification Opportunities for Baxter International and Viemed Healthcare
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Baxter and Viemed is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Baxter International and Viemed Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viemed Healthcare 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 Viemed Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viemed Healthcare has no effect on the direction of Baxter International i.e., Baxter International and Viemed Healthcare go up and down completely randomly.
Pair Corralation between Baxter International and Viemed Healthcare
Considering the 90-day investment horizon Baxter International is expected to under-perform the Viemed Healthcare. But the stock apears to be less risky and, when comparing its historical volatility, Baxter International is 1.07 times less risky than Viemed Healthcare. The stock trades about -0.21 of its potential returns per unit of risk. The Viemed Healthcare is currently generating about -0.19 of returns per unit of risk over similar time horizon. If you would invest 951.00 in Viemed Healthcare on September 12, 2024 and sell it today you would lose (71.00) from holding Viemed Healthcare or give up 7.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baxter International vs. Viemed Healthcare
Performance |
| Timeline |
| Baxter International |
| Viemed Healthcare |
Baxter International and Viemed Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baxter International and Viemed Healthcare
The main advantage of trading using opposite Baxter International and Viemed Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baxter International position performs unexpectedly, Viemed Healthcare 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 Viemed Healthcare will offset losses from the drop in Viemed Healthcare's long position.| Baxter International vs. West Pharmaceutical Services | Baxter International vs. Alcon AG | Baxter International vs. ResMed Inc | Baxter International vs. ICU Medical |
| Viemed Healthcare vs. Profound Medical Corp | Viemed Healthcare vs. Si Bone | Viemed Healthcare vs. IRIDEX | Viemed Healthcare vs. SurModics |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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