Correlation Between STERIS Plc and Zimmer Biomet
Can any of the company-specific risk be diversified away by investing in both STERIS Plc and Zimmer Biomet 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 Zimmer Biomet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STERIS plc and Zimmer Biomet Holdings, you can compare the effects of market volatilities on STERIS Plc and Zimmer Biomet 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 Zimmer Biomet. Check out your portfolio center. Please also check ongoing floating volatility patterns of STERIS Plc and Zimmer Biomet.
Diversification Opportunities for STERIS Plc and Zimmer Biomet
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between STERIS and Zimmer is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding STERIS plc and Zimmer Biomet Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zimmer Biomet Holdings 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 Zimmer Biomet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zimmer Biomet Holdings has no effect on the direction of STERIS Plc i.e., STERIS Plc and Zimmer Biomet go up and down completely randomly.
Pair Corralation between STERIS Plc and Zimmer Biomet
Considering the 90-day investment horizon STERIS plc is expected to under-perform the Zimmer Biomet. In addition to that, STERIS Plc is 1.13 times more volatile than Zimmer Biomet Holdings. It trades about -0.08 of its total potential returns per unit of risk. Zimmer Biomet Holdings is currently generating about 0.07 per unit of volatility. If you would invest 10,981 in Zimmer Biomet Holdings on August 31, 2024 and sell it today you would earn a total of 221.00 from holding Zimmer Biomet Holdings or generate 2.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
STERIS plc vs. Zimmer Biomet Holdings
Performance |
| Timeline |
| STERIS plc |
| Zimmer Biomet Holdings |
STERIS Plc and Zimmer Biomet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STERIS Plc and Zimmer Biomet
The main advantage of trading using opposite STERIS Plc and Zimmer Biomet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STERIS Plc position performs unexpectedly, Zimmer Biomet 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 Zimmer Biomet will offset losses from the drop in Zimmer Biomet's long position.| STERIS Plc vs. Abbott Laboratories | STERIS Plc vs. Medtronic PLC | STERIS Plc vs. Edwards Lifesciences Corp | STERIS Plc vs. ZimVie Inc |
| Zimmer Biomet vs. Abbott Laboratories | Zimmer Biomet vs. Medtronic PLC | Zimmer Biomet vs. Edwards Lifesciences Corp | Zimmer Biomet vs. ZimVie 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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