Correlation Between Stryker and Koninklijke Philips
Can any of the company-specific risk be diversified away by investing in both Stryker and Koninklijke Philips 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 Koninklijke Philips into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stryker and Koninklijke Philips NV, you can compare the effects of market volatilities on Stryker and Koninklijke Philips 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 Koninklijke Philips. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stryker and Koninklijke Philips.
Diversification Opportunities for Stryker and Koninklijke Philips
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Stryker and Koninklijke is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Stryker and Koninklijke Philips NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Koninklijke Philips 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 Koninklijke Philips. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Koninklijke Philips has no effect on the direction of Stryker i.e., Stryker and Koninklijke Philips go up and down completely randomly.
Pair Corralation between Stryker and Koninklijke Philips
Considering the 90-day investment horizon Stryker is expected to generate 1.2 times less return on investment than Koninklijke Philips. But when comparing it to its historical volatility, Stryker is 1.86 times less risky than Koninklijke Philips. It trades about 0.08 of its potential returns per unit of risk. Koninklijke Philips NV is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,868 in Koninklijke Philips NV on August 27, 2024 and sell it today you would earn a total of 771.00 from holding Koninklijke Philips NV or generate 41.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stryker vs. Koninklijke Philips NV
Performance |
| Timeline |
| Stryker |
| Koninklijke Philips |
Stryker and Koninklijke Philips Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stryker and Koninklijke Philips
The main advantage of trading using opposite Stryker and Koninklijke Philips positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stryker position performs unexpectedly, Koninklijke Philips 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 Koninklijke Philips will offset losses from the drop in Koninklijke Philips' long position.| Stryker vs. Heartbeam | Stryker vs. EUDA Health Holdings | Stryker vs. Nutex Health | Stryker vs. Healthcare Triangle |
| Koninklijke Philips vs. Heartbeam | Koninklijke Philips vs. EUDA Health Holdings | Koninklijke Philips vs. Nutex Health | Koninklijke Philips vs. Healthcare Triangle |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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