Correlation Between Medtronic PLC and Avita Medical
Can any of the company-specific risk be diversified away by investing in both Medtronic PLC and Avita 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 Medtronic PLC and Avita Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Medtronic PLC and Avita Medical, you can compare the effects of market volatilities on Medtronic PLC and Avita 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 Medtronic PLC with a short position of Avita Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medtronic PLC and Avita Medical.
Diversification Opportunities for Medtronic PLC and Avita Medical
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Medtronic and Avita is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Medtronic PLC and Avita Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avita Medical 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 Avita Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avita Medical has no effect on the direction of Medtronic PLC i.e., Medtronic PLC and Avita Medical go up and down completely randomly.
Pair Corralation between Medtronic PLC and Avita Medical
Considering the 90-day investment horizon Medtronic PLC is expected to generate 6.05 times less return on investment than Avita Medical. But when comparing it to its historical volatility, Medtronic PLC is 3.69 times less risky than Avita Medical. It trades about 0.03 of its potential returns per unit of risk. Avita Medical is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 695.00 in Avita Medical on September 2, 2024 and sell it today you would earn a total of 587.00 from holding Avita Medical or generate 84.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Medtronic PLC vs. Avita Medical
Performance |
| Timeline |
| Medtronic PLC |
| Avita Medical |
Medtronic PLC and Avita Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Medtronic PLC and Avita Medical
The main advantage of trading using opposite Medtronic PLC and Avita Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medtronic PLC position performs unexpectedly, Avita 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 Avita Medical will offset losses from the drop in Avita Medical'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 |
| Avita Medical vs. Tff Pharmaceuticals | Avita Medical vs. Eliem Therapeutics | Avita Medical vs. Inhibrx | Avita Medical vs. Enliven Therapeutics |
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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