Correlation Between Medtronic PLC and CONMED
Can any of the company-specific risk be diversified away by investing in both Medtronic PLC and CONMED 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 Medtronic PLC and CONMED into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Medtronic PLC and CONMED, you can compare the effects of market volatilities on Medtronic PLC and CONMED 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 Medtronic PLC with a short position of CONMED. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medtronic PLC and CONMED.
Diversification Opportunities for Medtronic PLC and CONMED
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Medtronic and CONMED is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Medtronic PLC and CONMED in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CONMED and Medtronic PLC 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 Medtronic PLC are associated (or correlated) with CONMED. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CONMED has no effect on the direction of Medtronic PLC i.e., Medtronic PLC and CONMED go up and down completely randomly.
Pair Corralation between Medtronic PLC and CONMED
Considering the 90-day investment horizon Medtronic PLC is expected to generate 0.52 times more return on investment than CONMED. However, Medtronic PLC is 1.92 times less risky than CONMED. It trades about 0.03 of its potential returns per unit of risk. CONMED is currently generating about -0.02 per unit of risk. If you would invest 7,996 in Medtronic PLC on November 9, 2024 and sell it today you would earn a total of 1,086 from holding Medtronic PLC or generate 13.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Medtronic PLC vs. CONMED
Performance |
| Timeline |
| Medtronic PLC |
| CONMED |
Medtronic PLC and CONMED Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Medtronic PLC and CONMED
The main advantage of trading using opposite Medtronic PLC and CONMED positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medtronic PLC position performs unexpectedly, CONMED 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 CONMED will offset losses from the drop in CONMED's long position.| Medtronic PLC vs. Edwards Lifesciences Corp | Medtronic PLC vs. Abbott Laboratories | Medtronic PLC vs. Boston Scientific Corp | Medtronic PLC vs. Zimmer Biomet Holdings |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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