Correlation Between Stryker and BlueScope Steel
Can any of the company-specific risk be diversified away by investing in both Stryker and BlueScope Steel 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 Stryker and BlueScope Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stryker and BlueScope Steel Limited, you can compare the effects of market volatilities on Stryker and BlueScope Steel 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 Stryker with a short position of BlueScope Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stryker and BlueScope Steel.
Diversification Opportunities for Stryker and BlueScope Steel
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Stryker and BlueScope is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Stryker and BlueScope Steel Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlueScope Steel and Stryker 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 Stryker are associated (or correlated) with BlueScope Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlueScope Steel has no effect on the direction of Stryker i.e., Stryker and BlueScope Steel go up and down completely randomly.
Pair Corralation between Stryker and BlueScope Steel
Assuming the 90 days horizon Stryker is expected to generate 0.69 times more return on investment than BlueScope Steel. However, Stryker is 1.44 times less risky than BlueScope Steel. It trades about 0.3 of its potential returns per unit of risk. BlueScope Steel Limited is currently generating about 0.05 per unit of risk. If you would invest 32,820 in Stryker on August 29, 2024 and sell it today you would earn a total of 4,300 from holding Stryker or generate 13.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stryker vs. BlueScope Steel Limited
Performance |
| Timeline |
| Stryker |
| BlueScope Steel |
Stryker and BlueScope Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stryker and BlueScope Steel
The main advantage of trading using opposite Stryker and BlueScope Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stryker position performs unexpectedly, BlueScope Steel 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 BlueScope Steel will offset losses from the drop in BlueScope Steel's long position.| Stryker vs. Superior Plus Corp | Stryker vs. NMI Holdings | Stryker vs. Origin Agritech | Stryker vs. SIVERS SEMICONDUCTORS AB |
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 Stocks Directory module to find actively traded stocks across global markets.
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