Correlation Between STERIS Plc and Pulmonx Corp
Can any of the company-specific risk be diversified away by investing in both STERIS Plc and Pulmonx Corp 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 STERIS Plc and Pulmonx Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STERIS plc and Pulmonx Corp, you can compare the effects of market volatilities on STERIS Plc and Pulmonx Corp 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 STERIS Plc with a short position of Pulmonx Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of STERIS Plc and Pulmonx Corp.
Diversification Opportunities for STERIS Plc and Pulmonx Corp
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between STERIS and Pulmonx is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding STERIS plc and Pulmonx Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pulmonx Corp and STERIS Plc 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 STERIS plc are associated (or correlated) with Pulmonx Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pulmonx Corp has no effect on the direction of STERIS Plc i.e., STERIS Plc and Pulmonx Corp go up and down completely randomly.
Pair Corralation between STERIS Plc and Pulmonx Corp
Considering the 90-day investment horizon STERIS plc is expected to generate 0.33 times more return on investment than Pulmonx Corp. However, STERIS plc is 2.99 times less risky than Pulmonx Corp. It trades about 0.02 of its potential returns per unit of risk. Pulmonx Corp is currently generating about -0.02 per unit of risk. If you would invest 20,279 in STERIS plc on August 31, 2024 and sell it today you would earn a total of 1,627 from holding STERIS plc or generate 8.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
STERIS plc vs. Pulmonx Corp
Performance |
| Timeline |
| STERIS plc |
| Pulmonx Corp |
STERIS Plc and Pulmonx Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STERIS Plc and Pulmonx Corp
The main advantage of trading using opposite STERIS Plc and Pulmonx Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STERIS Plc position performs unexpectedly, Pulmonx Corp 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 Pulmonx Corp will offset losses from the drop in Pulmonx Corp's long position.| STERIS Plc vs. Abbott Laboratories | STERIS Plc vs. Medtronic PLC | STERIS Plc vs. Edwards Lifesciences Corp | STERIS Plc vs. ZimVie Inc |
| Pulmonx Corp vs. Iradimed Co | Pulmonx Corp vs. Orthofix Medical | Pulmonx Corp vs. Neuropace | Pulmonx Corp vs. Integer Holdings 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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