Correlation Between Varex Imaging and Profound Medical
Can any of the company-specific risk be diversified away by investing in both Varex Imaging 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 Varex Imaging and Profound Medical 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 Profound Medical Corp, you can compare the effects of market volatilities on Varex Imaging 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 Varex Imaging with a short position of Profound Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Varex Imaging and Profound Medical.
Diversification Opportunities for Varex Imaging and Profound Medical
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Varex and Profound is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Varex Imaging Corp 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 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 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 Varex Imaging i.e., Varex Imaging and Profound Medical go up and down completely randomly.
Pair Corralation between Varex Imaging and Profound Medical
Given the investment horizon of 90 days Varex Imaging Corp is expected to under-perform the Profound Medical. But the stock apears to be less risky and, when comparing its historical volatility, Varex Imaging Corp is 1.79 times less risky than Profound Medical. The stock trades about -0.01 of its potential returns per unit of risk. The Profound Medical Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 531.00 in Profound Medical Corp on August 24, 2024 and sell it today you would earn a total of 224.00 from holding Profound Medical Corp or generate 42.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Varex Imaging Corp vs. Profound Medical Corp
Performance |
| Timeline |
| Varex Imaging Corp |
| Profound Medical Corp |
Varex Imaging and Profound Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Varex Imaging and Profound Medical
The main advantage of trading using opposite Varex Imaging and Profound Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Varex Imaging 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.| Varex Imaging vs. Sight Sciences | Varex Imaging vs. Apyx Medical | Varex Imaging vs. Si Bone | Varex Imaging vs. Iradimed Co |
| 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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