Correlation Between Vericel Corp and Bayer AG
Can any of the company-specific risk be diversified away by investing in both Vericel Corp and Bayer AG 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 Vericel Corp and Bayer AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vericel Corp Ord and Bayer AG PK, you can compare the effects of market volatilities on Vericel Corp and Bayer AG 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 Vericel Corp with a short position of Bayer AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vericel Corp and Bayer AG.
Diversification Opportunities for Vericel Corp and Bayer AG
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vericel and Bayer is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Vericel Corp Ord and Bayer AG PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bayer AG PK and Vericel Corp 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 Vericel Corp Ord are associated (or correlated) with Bayer AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bayer AG PK has no effect on the direction of Vericel Corp i.e., Vericel Corp and Bayer AG go up and down completely randomly.
Pair Corralation between Vericel Corp and Bayer AG
Given the investment horizon of 90 days Vericel Corp is expected to generate 10.39 times less return on investment than Bayer AG. But when comparing it to its historical volatility, Vericel Corp Ord is 1.02 times less risky than Bayer AG. It trades about 0.07 of its potential returns per unit of risk. Bayer AG PK is currently generating about 0.68 of returns per unit of risk over similar time horizon. If you would invest 1,566 in Bayer AG PK on August 27, 2024 and sell it today you would earn a total of 120.00 from holding Bayer AG PK or generate 7.66% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 0.88% |
Values | Daily Returns |
Vericel Corp Ord vs. Bayer AG PK
Performance |
Timeline |
Vericel Corp Ord |
Bayer AG PK |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Vericel Corp and Bayer AG Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Vericel Corp and Bayer AG
The main advantage of trading using opposite Vericel Corp and Bayer AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vericel Corp position performs unexpectedly, Bayer AG 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 Bayer AG will offset losses from the drop in Bayer AG's long position.Vericel Corp vs. Collplant Biotechnologies | Vericel Corp vs. Keros Therapeutics | Vericel Corp vs. Merus BV | Vericel Corp vs. Century Therapeutics |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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