Correlation Between Avita Medical and Medtronic PLC
Can any of the company-specific risk be diversified away by investing in both Avita Medical and Medtronic PLC 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 Medtronic PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avita Medical and Medtronic PLC, you can compare the effects of market volatilities on Avita Medical and Medtronic PLC 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 Medtronic PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avita Medical and Medtronic PLC.
Diversification Opportunities for Avita Medical and Medtronic PLC
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Avita and Medtronic is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Avita Medical and Medtronic PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medtronic PLC 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 Medtronic PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medtronic PLC has no effect on the direction of Avita Medical i.e., Avita Medical and Medtronic PLC go up and down completely randomly.
Pair Corralation between Avita Medical and Medtronic PLC
Given the investment horizon of 90 days Avita Medical is expected to generate 3.68 times more return on investment than Medtronic PLC. However, Avita Medical is 3.68 times more volatile than Medtronic PLC. It trades about 0.05 of its potential returns per unit of risk. Medtronic PLC is currently generating about 0.03 per unit of risk. If you would invest 749.00 in Avita Medical on September 3, 2024 and sell it today you would earn a total of 533.00 from holding Avita Medical or generate 71.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avita Medical vs. Medtronic PLC
Performance |
| Timeline |
| Avita Medical |
| Medtronic PLC |
Avita Medical and Medtronic PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avita Medical and Medtronic PLC
The main advantage of trading using opposite Avita Medical and Medtronic PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avita Medical position performs unexpectedly, Medtronic PLC 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 Medtronic PLC will offset losses from the drop in Medtronic PLC's long position.| Avita Medical vs. Clearpoint Neuro | Avita Medical vs. Sight Sciences | Avita Medical vs. Treace Medical Concepts | Avita Medical vs. Rxsight |
| Medtronic PLC vs. Tandem Diabetes Care | Medtronic PLC vs. Inspire Medical Systems | Medtronic PLC vs. Penumbra | Medtronic PLC vs. Insulet |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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