Correlation Between Varex Imaging and Elutia
Can any of the company-specific risk be diversified away by investing in both Varex Imaging and Elutia 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 Varex Imaging and Elutia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Varex Imaging Corp and Elutia Inc, you can compare the effects of market volatilities on Varex Imaging and Elutia 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 Varex Imaging with a short position of Elutia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Varex Imaging and Elutia.
Diversification Opportunities for Varex Imaging and Elutia
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Varex and Elutia is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Varex Imaging Corp and Elutia Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elutia Inc and Varex Imaging 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 Varex Imaging Corp are associated (or correlated) with Elutia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elutia Inc has no effect on the direction of Varex Imaging i.e., Varex Imaging and Elutia go up and down completely randomly.
Pair Corralation between Varex Imaging and Elutia
Given the investment horizon of 90 days Varex Imaging Corp is expected to generate 0.47 times more return on investment than Elutia. However, Varex Imaging Corp is 2.11 times less risky than Elutia. It trades about 0.09 of its potential returns per unit of risk. Elutia Inc is currently generating about -0.08 per unit of risk. If you would invest 1,456 in Varex Imaging Corp on September 20, 2024 and sell it today you would earn a total of 60.00 from holding Varex Imaging Corp or generate 4.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Varex Imaging Corp vs. Elutia Inc
Performance |
| Timeline |
| Varex Imaging Corp |
| Elutia Inc |
Varex Imaging and Elutia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Varex Imaging and Elutia
The main advantage of trading using opposite Varex Imaging and Elutia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Varex Imaging position performs unexpectedly, Elutia 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 Elutia will offset losses from the drop in Elutia's long position.The idea behind Varex Imaging Corp and Elutia Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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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