Correlation Between ICU Medical and Terumo Corp
Can any of the company-specific risk be diversified away by investing in both ICU Medical and Terumo Corp 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 ICU Medical and Terumo Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ICU Medical and Terumo Corp ADR, you can compare the effects of market volatilities on ICU Medical and Terumo Corp 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 ICU Medical with a short position of Terumo Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of ICU Medical and Terumo Corp.
Diversification Opportunities for ICU Medical and Terumo Corp
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between ICU and Terumo is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding ICU Medical and Terumo Corp ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Terumo Corp ADR and ICU Medical 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 ICU Medical are associated (or correlated) with Terumo Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Terumo Corp ADR has no effect on the direction of ICU Medical i.e., ICU Medical and Terumo Corp go up and down completely randomly.
Pair Corralation between ICU Medical and Terumo Corp
Given the investment horizon of 90 days ICU Medical is expected to generate 1.49 times more return on investment than Terumo Corp. However, ICU Medical is 1.49 times more volatile than Terumo Corp ADR. It trades about 0.11 of its potential returns per unit of risk. Terumo Corp ADR is currently generating about 0.06 per unit of risk. If you would invest 8,625 in ICU Medical on September 3, 2024 and sell it today you would earn a total of 7,771 from holding ICU Medical or generate 90.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ICU Medical vs. Terumo Corp ADR
Performance |
| Timeline |
| ICU Medical |
| Terumo Corp ADR |
ICU Medical and Terumo Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ICU Medical and Terumo Corp
The main advantage of trading using opposite ICU Medical and Terumo Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ICU Medical position performs unexpectedly, Terumo Corp 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 Terumo Corp will offset losses from the drop in Terumo Corp's long position.| ICU Medical vs. Merit Medical Systems | ICU Medical vs. The Cooper Companies, | ICU Medical vs. AngioDynamics | ICU Medical vs. AptarGroup |
| Terumo Corp vs. Hologic | Terumo Corp vs. Haemonetics | Terumo Corp vs. ICU Medical | Terumo Corp vs. Envista Holdings Corp |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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