Correlation Between ESSILORLUXOTTICA and Avanos Medical
Can any of the company-specific risk be diversified away by investing in both ESSILORLUXOTTICA and Avanos Medical 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 ESSILORLUXOTTICA and Avanos Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ESSILORLUXOTTICA 12ON and Avanos Medical, you can compare the effects of market volatilities on ESSILORLUXOTTICA and Avanos Medical 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 ESSILORLUXOTTICA with a short position of Avanos Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of ESSILORLUXOTTICA and Avanos Medical.
Diversification Opportunities for ESSILORLUXOTTICA and Avanos Medical
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between ESSILORLUXOTTICA and Avanos is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding ESSILORLUXOTTICA 12ON and Avanos Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avanos Medical and ESSILORLUXOTTICA 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 ESSILORLUXOTTICA 12ON are associated (or correlated) with Avanos Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avanos Medical has no effect on the direction of ESSILORLUXOTTICA i.e., ESSILORLUXOTTICA and Avanos Medical go up and down completely randomly.
Pair Corralation between ESSILORLUXOTTICA and Avanos Medical
Assuming the 90 days trading horizon ESSILORLUXOTTICA 12ON is expected to generate 0.43 times more return on investment than Avanos Medical. However, ESSILORLUXOTTICA 12ON is 2.32 times less risky than Avanos Medical. It trades about -0.04 of its potential returns per unit of risk. Avanos Medical is currently generating about -0.13 per unit of risk. If you would invest 11,400 in ESSILORLUXOTTICA 12ON on September 12, 2024 and sell it today you would lose (100.00) from holding ESSILORLUXOTTICA 12ON or give up 0.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
ESSILORLUXOTTICA 12ON vs. Avanos Medical
Performance |
| Timeline |
| ESSILORLUXOTTICA 12ON |
| Avanos Medical |
ESSILORLUXOTTICA and Avanos Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ESSILORLUXOTTICA and Avanos Medical
The main advantage of trading using opposite ESSILORLUXOTTICA and Avanos Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ESSILORLUXOTTICA position performs unexpectedly, Avanos Medical 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 Avanos Medical will offset losses from the drop in Avanos Medical's long position.| ESSILORLUXOTTICA vs. CAL MAINE FOODS | ESSILORLUXOTTICA vs. CarsalesCom | ESSILORLUXOTTICA vs. United Utilities Group | ESSILORLUXOTTICA vs. Canadian Utilities Limited |
| Avanos Medical vs. Major Drilling Group | Avanos Medical vs. Kaiser Aluminum | Avanos Medical vs. LION ONE METALS | Avanos Medical vs. SWISS WATER DECAFFCOFFEE |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device |