Correlation Between CVRx and Stryker
Can any of the company-specific risk be diversified away by investing in both CVRx and Stryker 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 CVRx and Stryker into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVRx Inc and Stryker, you can compare the effects of market volatilities on CVRx and Stryker 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 CVRx with a short position of Stryker. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVRx and Stryker.
Diversification Opportunities for CVRx and Stryker
Poor diversification
The 3 months correlation between CVRx and Stryker is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding CVRx Inc and Stryker in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stryker and CVRx 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 CVRx Inc are associated (or correlated) with Stryker. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stryker has no effect on the direction of CVRx i.e., CVRx and Stryker go up and down completely randomly.
Pair Corralation between CVRx and Stryker
Given the investment horizon of 90 days CVRx Inc is expected to generate 6.55 times more return on investment than Stryker. However, CVRx is 6.55 times more volatile than Stryker. It trades about 0.26 of its potential returns per unit of risk. Stryker is currently generating about 0.35 per unit of risk. If you would invest 1,029 in CVRx Inc on August 28, 2024 and sell it today you would earn a total of 501.00 from holding CVRx Inc or generate 48.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CVRx Inc vs. Stryker
Performance |
| Timeline |
| CVRx Inc |
| Stryker |
CVRx and Stryker Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVRx and Stryker
The main advantage of trading using opposite CVRx and Stryker positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVRx position performs unexpectedly, Stryker 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 Stryker will offset losses from the drop in Stryker's long position.The idea behind CVRx Inc and Stryker 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.| Stryker vs. Boston Scientific Corp | Stryker vs. Abbott Laboratories | Stryker vs. Medtronic PLC | Stryker vs. DexCom Inc |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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