Correlation Between VARIOUS EATERIES and Avanos Medical

Can any of the company-specific risk be diversified away by investing in both VARIOUS EATERIES and Avanos 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 VARIOUS EATERIES and Avanos Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between VARIOUS EATERIES LS and Avanos Medical, you can compare the effects of market volatilities on VARIOUS EATERIES and Avanos 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 VARIOUS EATERIES with a short position of Avanos Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of VARIOUS EATERIES and Avanos Medical.

Diversification Opportunities for VARIOUS EATERIES and Avanos Medical

-0.24

Correlation Coefficient

VARIOUS EATERIES  Avanos Medical

Very good diversification

The 3 months correlation between VARIOUS and Avanos is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding VARIOUS EATERIES LS and Avanos Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avanos Medical and VARIOUS EATERIES 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 VARIOUS EATERIES LS are associated (or correlated) with Avanos Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avanos Medical has no effect on the direction of VARIOUS EATERIES i.e., VARIOUS EATERIES and Avanos Medical go up and down completely randomly.

Pair Corralation between VARIOUS EATERIES and Avanos Medical

Assuming the 90 days horizon VARIOUS EATERIES LS is expected to generate 0.49 times more return on investment than Avanos Medical. However, VARIOUS EATERIES LS is 2.03 times less risky than Avanos Medical. It trades about 0.01 of its potential returns per unit of risk. Avanos Medical is currently generating about -0.08 per unit of risk. If you would invest  20.00  in VARIOUS EATERIES LS on September 12, 2024 and sell it today you would earn a total of  0.00  from holding VARIOUS EATERIES LS or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

VARIOUS EATERIES LS  vs.  Avanos Medical

VARIOUS EATERIES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VARIOUS EATERIES LS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, VARIOUS EATERIES is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Avanos Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Avanos Medical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with VARIOUS EATERIES and Avanos Medical

The main advantage of trading using opposite VARIOUS EATERIES and Avanos Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VARIOUS EATERIES position performs unexpectedly, Avanos 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 Avanos Medical will offset losses from the drop in Avanos Medical's long position.

The idea behind VARIOUS EATERIES LS and Avanos Medical 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.

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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.