Correlation Between Alcon AG and AtriCure

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

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

Diversification Opportunities for Alcon AG and AtriCure

-0.82

Correlation Coefficient

Alcon AG  AtriCure

Pay attention - limited upside

The 3 months correlation between Alcon and AtriCure is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Alcon AG and AtriCure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AtriCure and Alcon AG 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 Alcon AG are associated (or correlated) with AtriCure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AtriCure has no effect on the direction of Alcon AG i.e., Alcon AG and AtriCure go up and down completely randomly.

Pair Corralation between Alcon AG and AtriCure

Considering the 90-day investment horizon Alcon AG is expected to under-perform the AtriCure. But the stock apears to be less risky and, when comparing its historical volatility, Alcon AG is 2.52 times less risky than AtriCure. The stock trades about -0.09 of its potential returns per unit of risk. The AtriCure is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  2,594  in AtriCure on September 2, 2024 and sell it today you would earn a total of  1,022  from holding AtriCure or generate 39.4% return on investment over 90 days.

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

Alcon AG  vs.  AtriCure

Alcon AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alcon AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's essential indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

AtriCure

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AtriCure are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, AtriCure exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alcon AG and AtriCure

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

The idea behind Alcon AG and AtriCure 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.

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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.