Correlation Between Zimmer Biomet and GrafTech International
Can any of the company-specific risk be diversified away by investing in both Zimmer Biomet and GrafTech International 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 GrafTech International 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 GrafTech International, you can compare the effects of market volatilities on Zimmer Biomet and GrafTech International 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 GrafTech International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zimmer Biomet and GrafTech International.
Diversification Opportunities for Zimmer Biomet and GrafTech International
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Zimmer and GrafTech is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Zimmer Biomet Holdings and GrafTech International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GrafTech International 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 GrafTech International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GrafTech International has no effect on the direction of Zimmer Biomet i.e., Zimmer Biomet and GrafTech International go up and down completely randomly.
Pair Corralation between Zimmer Biomet and GrafTech International
Assuming the 90 days horizon Zimmer Biomet Holdings is expected to generate 0.22 times more return on investment than GrafTech International. However, Zimmer Biomet Holdings is 4.49 times less risky than GrafTech International. It trades about -0.29 of its potential returns per unit of risk. GrafTech International is currently generating about -0.23 per unit of risk. If you would invest 10,231 in Zimmer Biomet Holdings on October 12, 2024 and sell it today you would lose (425.00) from holding Zimmer Biomet Holdings or give up 4.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zimmer Biomet Holdings vs. GrafTech International
Performance |
| Timeline |
| Zimmer Biomet Holdings |
| GrafTech International |
Zimmer Biomet and GrafTech International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zimmer Biomet and GrafTech International
The main advantage of trading using opposite Zimmer Biomet and GrafTech International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zimmer Biomet position performs unexpectedly, GrafTech International 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 GrafTech International will offset losses from the drop in GrafTech International's long position.| Zimmer Biomet vs. Japan Asia Investment | Zimmer Biomet vs. SOLSTAD OFFSHORE NK | Zimmer Biomet vs. CSSC Offshore Marine | Zimmer Biomet vs. HK Electric Investments |
| GrafTech International vs. The Yokohama Rubber | GrafTech International vs. Materialise NV | GrafTech International vs. Martin Marietta Materials | GrafTech International vs. THRACE PLASTICS |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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