Correlation Between Stryker and Smith Nephew
Can any of the company-specific risk be diversified away by investing in both Stryker and Smith Nephew 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 Smith Nephew into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stryker and Smith Nephew SNATS, you can compare the effects of market volatilities on Stryker and Smith Nephew 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 Smith Nephew. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stryker and Smith Nephew.
Diversification Opportunities for Stryker and Smith Nephew
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Stryker and Smith is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Stryker and Smith Nephew SNATS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smith Nephew SNATS 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 Smith Nephew. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smith Nephew SNATS has no effect on the direction of Stryker i.e., Stryker and Smith Nephew go up and down completely randomly.
Pair Corralation between Stryker and Smith Nephew
Considering the 90-day investment horizon Stryker is expected to generate 0.38 times more return on investment than Smith Nephew. However, Stryker is 2.6 times less risky than Smith Nephew. It trades about 0.25 of its potential returns per unit of risk. Smith Nephew SNATS is currently generating about -0.15 per unit of risk. If you would invest 36,343 in Stryker on August 31, 2024 and sell it today you would earn a total of 2,471 from holding Stryker or generate 6.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stryker vs. Smith Nephew SNATS
Performance |
| Timeline |
| Stryker |
| Smith Nephew SNATS |
Stryker and Smith Nephew Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stryker and Smith Nephew
The main advantage of trading using opposite Stryker and Smith Nephew positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stryker position performs unexpectedly, Smith Nephew 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 Smith Nephew will offset losses from the drop in Smith Nephew's long position.| Stryker vs. Abbott Laboratories | Stryker vs. Medtronic PLC | Stryker vs. Edwards Lifesciences Corp | Stryker vs. ZimVie Inc |
| Smith Nephew vs. CochLear Ltd ADR | Smith Nephew vs. Integer Holdings Corp | Smith Nephew vs. Orthofix Medical | Smith Nephew vs. Glaukos Corp |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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