Correlation Between Stryker and SomnoMed
Can any of the company-specific risk be diversified away by investing in both Stryker and SomnoMed 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 SomnoMed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stryker and SomnoMed Limited, you can compare the effects of market volatilities on Stryker and SomnoMed 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 SomnoMed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stryker and SomnoMed.
Diversification Opportunities for Stryker and SomnoMed
Poor diversification
The 3 months correlation between Stryker and SomnoMed is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Stryker and SomnoMed Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SomnoMed Limited 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 SomnoMed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SomnoMed Limited has no effect on the direction of Stryker i.e., Stryker and SomnoMed go up and down completely randomly.
Pair Corralation between Stryker and SomnoMed
Considering the 90-day investment horizon Stryker is expected to under-perform the SomnoMed. But the stock apears to be less risky and, when comparing its historical volatility, Stryker is 3.45 times less risky than SomnoMed. The stock trades about -0.13 of its potential returns per unit of risk. The SomnoMed Limited is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 38.00 in SomnoMed Limited on November 28, 2024 and sell it today you would earn a total of 3.00 from holding SomnoMed Limited or generate 7.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stryker vs. SomnoMed Limited
Performance |
| Timeline |
| Stryker |
| SomnoMed Limited |
Stryker and SomnoMed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stryker and SomnoMed
The main advantage of trading using opposite Stryker and SomnoMed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stryker position performs unexpectedly, SomnoMed 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 SomnoMed will offset losses from the drop in SomnoMed's long position.| Stryker vs. Boston Scientific Corp | Stryker vs. Abbott Laboratories | Stryker vs. Medtronic PLC | Stryker vs. DexCom Inc |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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