Correlation Between Doximity and Varex Imaging

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

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

Diversification Opportunities for Doximity and Varex Imaging

0.69

Correlation Coefficient

Doximity  Varex Imaging

Poor diversification

The 3 months correlation between Doximity and Varex is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Doximity and Varex Imaging Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Varex Imaging Corp and Doximity 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 Doximity are associated (or correlated) with Varex Imaging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Varex Imaging Corp has no effect on the direction of Doximity i.e., Doximity and Varex Imaging go up and down completely randomly.

Pair Corralation between Doximity and Varex Imaging

Given the investment horizon of 90 days Doximity is expected to generate 1.52 times more return on investment than Varex Imaging. However, Doximity is 1.52 times more volatile than Varex Imaging Corp. It trades about 0.14 of its potential returns per unit of risk. Varex Imaging Corp is currently generating about 0.18 per unit of risk. If you would invest  3,590  in Doximity on September 1, 2024 and sell it today you would earn a total of  1,710  from holding Doximity or generate 47.63% return on investment over 90 days.

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

Doximity  vs.  Varex Imaging Corp

Doximity

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Doximity are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady fundamental indicators, Doximity unveiled solid returns over the last few months and may actually be approaching a breakup point.

Varex Imaging Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Varex Imaging Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain technical and fundamental indicators, Varex Imaging showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Doximity and Varex Imaging

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

The idea behind Doximity and Varex Imaging Corp 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.