Correlation Between Baxter International and Vivos Therapeutics

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

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

Diversification Opportunities for Baxter International and Vivos Therapeutics

-0.22

Correlation Coefficient

Baxter International  Vivos Therapeutics

Very good diversification

The 3 months correlation between Baxter and Vivos is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Baxter International and Vivos Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vivos Therapeutics 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 Vivos Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vivos Therapeutics has no effect on the direction of Baxter International i.e., Baxter International and Vivos Therapeutics go up and down completely randomly.

Pair Corralation between Baxter International and Vivos Therapeutics

Considering the 90-day investment horizon Baxter International is expected to under-perform the Vivos Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Baxter International is 21.08 times less risky than Vivos Therapeutics. The stock trades about -0.03 of its potential returns per unit of risk. The Vivos Therapeutics is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  873.00  in Vivos Therapeutics on September 5, 2024 and sell it today you would lose (515.00) from holding Vivos Therapeutics or give up 58.99% of portfolio value over 90 days.

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

Baxter International  vs.  Vivos Therapeutics

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.

Vivos Therapeutics

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vivos Therapeutics are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Vivos Therapeutics unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Baxter International and Vivos Therapeutics

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

The idea behind Baxter International and Vivos Therapeutics 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.