Correlation Between Stryker and Baxter International
Can any of the company-specific risk be diversified away by investing in both Stryker and Baxter International 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 Baxter International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stryker and Baxter International, you can compare the effects of market volatilities on Stryker and Baxter International 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 Baxter International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stryker and Baxter International.
Diversification Opportunities for Stryker and Baxter International
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Stryker and Baxter is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Stryker and Baxter International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baxter International 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 Baxter International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baxter International has no effect on the direction of Stryker i.e., Stryker and Baxter International go up and down completely randomly.
Pair Corralation between Stryker and Baxter International
Considering the 90-day investment horizon Stryker is expected to generate 0.58 times more return on investment than Baxter International. However, Stryker is 1.71 times less risky than Baxter International. It trades about -0.13 of its potential returns per unit of risk. Baxter International is currently generating about -0.22 per unit of risk. If you would invest 38,711 in Stryker on September 13, 2024 and sell it today you would lose (1,095) from holding Stryker or give up 2.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stryker vs. Baxter International
Performance |
| Timeline |
| Stryker |
| Baxter International |
Stryker and Baxter International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stryker and Baxter International
The main advantage of trading using opposite Stryker and Baxter International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stryker position performs unexpectedly, Baxter International 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 Baxter International will offset losses from the drop in Baxter International's long position.| Stryker vs. Boston Scientific Corp | Stryker vs. Abbott Laboratories | Stryker vs. Medtronic PLC | Stryker vs. DexCom Inc |
| Baxter International vs. Embecta Corp | Baxter International vs. West Pharmaceutical Services | Baxter International vs. ResMed Inc | Baxter International vs. The Cooper Companies, |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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