Correlation Between Smith Nephew and Tenon Medical
Can any of the company-specific risk be diversified away by investing in both Smith Nephew and Tenon 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 Smith Nephew and Tenon Medical 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 Tenon Medical, you can compare the effects of market volatilities on Smith Nephew and Tenon 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 Smith Nephew with a short position of Tenon Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smith Nephew and Tenon Medical.
Diversification Opportunities for Smith Nephew and Tenon Medical
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Smith and Tenon is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Smith Nephew plc and Tenon Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tenon Medical 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 Tenon Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tenon Medical has no effect on the direction of Smith Nephew i.e., Smith Nephew and Tenon Medical go up and down completely randomly.
Pair Corralation between Smith Nephew and Tenon Medical
Assuming the 90 days horizon Smith Nephew plc is expected to under-perform the Tenon Medical. But the pink sheet apears to be less risky and, when comparing its historical volatility, Smith Nephew plc is 27.26 times less risky than Tenon Medical. The pink sheet trades about -0.06 of its potential returns per unit of risk. The Tenon Medical is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 111.00 in Tenon Medical on January 11, 2025 and sell it today you would earn a total of 4.00 from holding Tenon Medical or generate 3.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smith Nephew plc vs. Tenon Medical
Performance |
| Timeline |
| Smith Nephew plc |
| Tenon Medical |
Smith Nephew and Tenon Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smith Nephew and Tenon Medical
The main advantage of trading using opposite Smith Nephew and Tenon Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smith Nephew position performs unexpectedly, Tenon 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 Tenon Medical will offset losses from the drop in Tenon Medical's long position.| Smith Nephew vs. Medtronic PLC | Smith Nephew vs. CONMED | Smith Nephew vs. Glaukos Corp | Smith Nephew vs. Integer Holdings Corp |
| Tenon Medical vs. Ainos Inc | Tenon Medical vs. STRATA Skin Sciences | Tenon Medical vs. Neuropace | Tenon Medical vs. Movano Inc |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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