Correlation Between Smith Nephew and CONMED
Can any of the company-specific risk be diversified away by investing in both Smith Nephew 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 Smith Nephew and CONMED 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 CONMED, you can compare the effects of market volatilities on Smith Nephew 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 Smith Nephew with a short position of CONMED. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smith Nephew and CONMED.
Diversification Opportunities for Smith Nephew and CONMED
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Smith and CONMED is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Smith Nephew plc and CONMED in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CONMED 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 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 Smith Nephew i.e., Smith Nephew and CONMED go up and down completely randomly.
Pair Corralation between Smith Nephew and CONMED
Assuming the 90 days horizon Smith Nephew plc is expected to generate 1.19 times more return on investment than CONMED. However, Smith Nephew is 1.19 times more volatile than CONMED. It trades about 0.0 of its potential returns per unit of risk. CONMED is currently generating about -0.05 per unit of risk. If you would invest 1,480 in Smith Nephew plc on August 31, 2024 and sell it today you would lose (188.00) from holding Smith Nephew plc or give up 12.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 79.68% |
| Values | Daily Returns |
Smith Nephew plc vs. CONMED
Performance |
| Timeline |
| Smith Nephew plc |
| CONMED |
Smith Nephew and CONMED Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smith Nephew and CONMED
The main advantage of trading using opposite Smith Nephew and CONMED positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smith Nephew 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.| Smith Nephew vs. Sonova Holding AG | Smith Nephew vs. Medtronic PLC | Smith Nephew vs. CONMED | Smith Nephew vs. Glaukos Corp |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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