Correlation Between Baxter International and Fonar
Can any of the company-specific risk be diversified away by investing in both Baxter International and Fonar 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 Baxter International and Fonar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baxter International and Fonar, you can compare the effects of market volatilities on Baxter International and Fonar 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 Baxter International with a short position of Fonar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baxter International and Fonar.
Diversification Opportunities for Baxter International and Fonar
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Baxter and Fonar is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Baxter International and Fonar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fonar and Baxter International 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 Baxter International are associated (or correlated) with Fonar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fonar has no effect on the direction of Baxter International i.e., Baxter International and Fonar go up and down completely randomly.
Pair Corralation between Baxter International and Fonar
Considering the 90-day investment horizon Baxter International is expected to under-perform the Fonar. But the stock apears to be less risky and, when comparing its historical volatility, Baxter International is 1.49 times less risky than Fonar. The stock trades about -0.16 of its potential returns per unit of risk. The Fonar is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 1,649 in Fonar on September 6, 2024 and sell it today you would lose (24.00) from holding Fonar or give up 1.46% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Baxter International vs. Fonar
Performance |
Timeline |
Baxter International |
Fonar |
Baxter International and Fonar Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Baxter International and Fonar
The main advantage of trading using opposite Baxter International and Fonar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baxter International position performs unexpectedly, Fonar 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 Fonar will offset losses from the drop in Fonar's long position.Baxter International vs. West Pharmaceutical Services | Baxter International vs. ResMed Inc | Baxter International vs. ICU Medical | Baxter International vs. AptarGroup |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
Other Complementary Tools
Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments |