Correlation Between Varex Imaging and Smith Nephew
Can any of the company-specific risk be diversified away by investing in both Varex Imaging 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 Varex Imaging and Smith Nephew 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 Smith Nephew SNATS, you can compare the effects of market volatilities on Varex Imaging 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 Varex Imaging with a short position of Smith Nephew. Check out your portfolio center. Please also check ongoing floating volatility patterns of Varex Imaging and Smith Nephew.
Diversification Opportunities for Varex Imaging and Smith Nephew
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Varex and Smith is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Varex Imaging Corp 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 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 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 Varex Imaging i.e., Varex Imaging and Smith Nephew go up and down completely randomly.
Pair Corralation between Varex Imaging and Smith Nephew
Given the investment horizon of 90 days Varex Imaging Corp is expected to under-perform the Smith Nephew. In addition to that, Varex Imaging is 1.43 times more volatile than Smith Nephew SNATS. It trades about -0.02 of its total potential returns per unit of risk. Smith Nephew SNATS is currently generating about -0.02 per unit of volatility. If you would invest 3,029 in Smith Nephew SNATS on August 31, 2024 and sell it today you would lose (458.00) from holding Smith Nephew SNATS or give up 15.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Varex Imaging Corp vs. Smith Nephew SNATS
Performance |
| Timeline |
| Varex Imaging Corp |
| Smith Nephew SNATS |
Varex Imaging and Smith Nephew Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Varex Imaging and Smith Nephew
The main advantage of trading using opposite Varex Imaging and Smith Nephew positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Varex Imaging 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.| Varex Imaging vs. Sight Sciences | Varex Imaging vs. Apyx Medical | Varex Imaging vs. Si Bone | Varex Imaging vs. Iradimed Co |
| 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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