Correlation Between Baxter International and Nano X

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

By analyzing existing cross correlation between Baxter International and Nano X Imaging, you can compare the effects of market volatilities on Baxter International and Nano X 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 Nano X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baxter International and Nano X.

Diversification Opportunities for Baxter International and Nano X

-0.57

Correlation Coefficient

Baxter International  Nano X

Excellent diversification

The 3 months correlation between Baxter and Nano is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Baxter International and Nano X Imaging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nano X Imaging 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 Nano X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nano X Imaging has no effect on the direction of Baxter International i.e., Baxter International and Nano X go up and down completely randomly.

Pair Corralation between Baxter International and Nano X

Considering the 90-day investment horizon Baxter International is expected to under-perform the Nano X. But the stock apears to be less risky and, when comparing its historical volatility, Baxter International is 3.47 times less risky than Nano X. The stock trades about -0.25 of its potential returns per unit of risk. The Nano X Imaging is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  600.00  in Nano X Imaging on September 23, 2024 and sell it today you would earn a total of  76.00  from holding Nano X Imaging or generate 12.67% return on investment over 90 days.

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

Baxter International  vs.  Nano X Imaging

Baxter International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Baxter International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Nano X Imaging

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nano X Imaging are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Nano X showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Baxter International and Nano X

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

The idea behind Baxter International and Nano X Imaging 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.