Correlation Between Avita Medical and Butterfly Network
Can any of the company-specific risk be diversified away by investing in both Avita Medical and Butterfly Network 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 Avita Medical and Butterfly Network into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avita Medical and Butterfly Network, you can compare the effects of market volatilities on Avita Medical and Butterfly Network 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 Avita Medical with a short position of Butterfly Network. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avita Medical and Butterfly Network.
Diversification Opportunities for Avita Medical and Butterfly Network
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Avita and Butterfly is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Avita Medical and Butterfly Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Butterfly Network and Avita 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 Avita Medical are associated (or correlated) with Butterfly Network. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Butterfly Network has no effect on the direction of Avita Medical i.e., Avita Medical and Butterfly Network go up and down completely randomly.
Pair Corralation between Avita Medical and Butterfly Network
Given the investment horizon of 90 days Avita Medical is expected to generate 7.38 times less return on investment than Butterfly Network. But when comparing it to its historical volatility, Avita Medical is 1.98 times less risky than Butterfly Network. It trades about 0.05 of its potential returns per unit of risk. Butterfly Network is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 179.00 in Butterfly Network on September 20, 2024 and sell it today you would earn a total of 133.00 from holding Butterfly Network or generate 74.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avita Medical vs. Butterfly Network
Performance |
| Timeline |
| Avita Medical |
| Butterfly Network |
Avita Medical and Butterfly Network Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avita Medical and Butterfly Network
The main advantage of trading using opposite Avita Medical and Butterfly Network positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avita Medical position performs unexpectedly, Butterfly Network 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 Butterfly Network will offset losses from the drop in Butterfly Network's long position.| Avita Medical vs. Clearpoint Neuro | Avita Medical vs. Sight Sciences | Avita Medical vs. Treace Medical Concepts | Avita Medical vs. Rxsight |
| Butterfly Network vs. Inari Medical | Butterfly Network vs. Masimo | Butterfly Network vs. Glaukos Corp | Butterfly Network vs. Inspire Medical Systems |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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