Correlation Between Zimmer Biomet and Lifeline Biotechnologies
Can any of the company-specific risk be diversified away by investing in both Zimmer Biomet and Lifeline Biotechnologies 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 Zimmer Biomet and Lifeline Biotechnologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zimmer Biomet Holdings and Lifeline Biotechnologies, you can compare the effects of market volatilities on Zimmer Biomet and Lifeline Biotechnologies 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 Zimmer Biomet with a short position of Lifeline Biotechnologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zimmer Biomet and Lifeline Biotechnologies.
Diversification Opportunities for Zimmer Biomet and Lifeline Biotechnologies
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Zimmer and Lifeline is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Zimmer Biomet Holdings and Lifeline Biotechnologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifeline Biotechnologies and Zimmer Biomet 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 Zimmer Biomet Holdings are associated (or correlated) with Lifeline Biotechnologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifeline Biotechnologies has no effect on the direction of Zimmer Biomet i.e., Zimmer Biomet and Lifeline Biotechnologies go up and down completely randomly.
Pair Corralation between Zimmer Biomet and Lifeline Biotechnologies
Considering the 90-day investment horizon Zimmer Biomet is expected to generate 7.58 times less return on investment than Lifeline Biotechnologies. But when comparing it to its historical volatility, Zimmer Biomet Holdings is 25.73 times less risky than Lifeline Biotechnologies. It trades about 0.17 of its potential returns per unit of risk. Lifeline Biotechnologies is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 0.02 in Lifeline Biotechnologies on October 28, 2024 and sell it today you would lose (0.01) from holding Lifeline Biotechnologies or give up 50.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.48% |
| Values | Daily Returns |
Zimmer Biomet Holdings vs. Lifeline Biotechnologies
Performance |
| Timeline |
| Zimmer Biomet Holdings |
| Lifeline Biotechnologies |
Zimmer Biomet and Lifeline Biotechnologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zimmer Biomet and Lifeline Biotechnologies
The main advantage of trading using opposite Zimmer Biomet and Lifeline Biotechnologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zimmer Biomet position performs unexpectedly, Lifeline Biotechnologies 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 Lifeline Biotechnologies will offset losses from the drop in Lifeline Biotechnologies' long position.| Zimmer Biomet vs. Orthofix Medical | Zimmer Biomet vs. SurModics | Zimmer Biomet vs. Pulmonx Corp | Zimmer Biomet vs. CVRx Inc |
| Lifeline Biotechnologies vs. Ainos Inc | Lifeline Biotechnologies vs. Armm Inc | Lifeline Biotechnologies vs. Cellink AB | Lifeline Biotechnologies vs. Bone Biologics 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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