Correlation Between Stryker and Profound Medical
Can any of the company-specific risk be diversified away by investing in both Stryker and Profound Medical 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 Profound Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stryker and Profound Medical Corp, you can compare the effects of market volatilities on Stryker and Profound Medical 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 Profound Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stryker and Profound Medical.
Diversification Opportunities for Stryker and Profound Medical
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Stryker and Profound is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Stryker and Profound Medical Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Profound Medical Corp 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 Profound Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Profound Medical Corp has no effect on the direction of Stryker i.e., Stryker and Profound Medical go up and down completely randomly.
Pair Corralation between Stryker and Profound Medical
Considering the 90-day investment horizon Stryker is expected to generate 0.33 times more return on investment than Profound Medical. However, Stryker is 3.05 times less risky than Profound Medical. It trades about 0.12 of its potential returns per unit of risk. Profound Medical Corp is currently generating about 0.03 per unit of risk. If you would invest 32,401 in Stryker on September 3, 2024 and sell it today you would earn a total of 6,814 from holding Stryker or generate 21.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stryker vs. Profound Medical Corp
Performance |
| Timeline |
| Stryker |
| Profound Medical Corp |
Stryker and Profound Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stryker and Profound Medical
The main advantage of trading using opposite Stryker and Profound Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stryker position performs unexpectedly, Profound Medical 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 Profound Medical will offset losses from the drop in Profound Medical's long position.| Stryker vs. Tandem Diabetes Care | Stryker vs. Inspire Medical Systems | Stryker vs. Penumbra | Stryker vs. Insulet |
| Profound Medical vs. Si Bone | Profound Medical vs. Sight Sciences | Profound Medical vs. Nevro Corp | Profound Medical vs. Paragon 28 |
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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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