Correlation Between Bruker and CochLear
Can any of the company-specific risk be diversified away by investing in both Bruker and CochLear 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 Bruker and CochLear into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bruker and CochLear Ltd ADR, you can compare the effects of market volatilities on Bruker and CochLear 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 Bruker with a short position of CochLear. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bruker and CochLear.
Diversification Opportunities for Bruker and CochLear
Good diversification
The 3 months correlation between Bruker and CochLear is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Bruker and CochLear Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CochLear ADR and Bruker 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 Bruker are associated (or correlated) with CochLear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CochLear ADR has no effect on the direction of Bruker i.e., Bruker and CochLear go up and down completely randomly.
Pair Corralation between Bruker and CochLear
Given the investment horizon of 90 days Bruker is expected to under-perform the CochLear. In addition to that, Bruker is 1.75 times more volatile than CochLear Ltd ADR. It trades about -0.12 of its total potential returns per unit of risk. CochLear Ltd ADR is currently generating about 0.15 per unit of volatility. If you would invest 9,333 in CochLear Ltd ADR on November 9, 2024 and sell it today you would earn a total of 496.00 from holding CochLear Ltd ADR or generate 5.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bruker vs. CochLear Ltd ADR
Performance |
| Timeline |
| Bruker |
| CochLear ADR |
Bruker and CochLear Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bruker and CochLear
The main advantage of trading using opposite Bruker and CochLear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bruker position performs unexpectedly, CochLear 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 CochLear will offset losses from the drop in CochLear's long position.The idea behind Bruker and CochLear Ltd ADR pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| CochLear vs. Smith Nephew SNATS | CochLear vs. Integer Holdings Corp | CochLear vs. Demant AS ADR | CochLear vs. GN Store Nord |
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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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