Correlation Between Smith Nephew and Bone Biologics
Can any of the company-specific risk be diversified away by investing in both Smith Nephew and Bone Biologics 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 Smith Nephew and Bone Biologics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smith Nephew plc and Bone Biologics Corp, you can compare the effects of market volatilities on Smith Nephew and Bone Biologics 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 Smith Nephew with a short position of Bone Biologics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smith Nephew and Bone Biologics.
Diversification Opportunities for Smith Nephew and Bone Biologics
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Smith and Bone is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Smith Nephew plc and Bone Biologics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bone Biologics Corp and Smith Nephew 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 Smith Nephew plc are associated (or correlated) with Bone Biologics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bone Biologics Corp has no effect on the direction of Smith Nephew i.e., Smith Nephew and Bone Biologics go up and down completely randomly.
Pair Corralation between Smith Nephew and Bone Biologics
Assuming the 90 days horizon Smith Nephew is expected to generate 1494.89 times less return on investment than Bone Biologics. But when comparing it to its historical volatility, Smith Nephew plc is 7.39 times less risky than Bone Biologics. It trades about 0.0 of its potential returns per unit of risk. Bone Biologics Corp is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 91.00 in Bone Biologics Corp on August 26, 2024 and sell it today you would earn a total of 2,758 from holding Bone Biologics Corp or generate 3030.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 84.34% |
| Values | Daily Returns |
Smith Nephew plc vs. Bone Biologics Corp
Performance |
| Timeline |
| Smith Nephew plc |
| Bone Biologics Corp |
Smith Nephew and Bone Biologics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smith Nephew and Bone Biologics
The main advantage of trading using opposite Smith Nephew and Bone Biologics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smith Nephew position performs unexpectedly, Bone Biologics 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 Bone Biologics will offset losses from the drop in Bone Biologics' long position.The idea behind Smith Nephew plc and Bone Biologics Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Bone Biologics vs. Heartbeam | Bone Biologics vs. EUDA Health Holdings | Bone Biologics vs. Nutex Health | Bone Biologics vs. Healthcare Triangle |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
Other Complementary Tools
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences |