Correlation Between Futura Medical and Dentsply Sirona

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

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

Diversification Opportunities for Futura Medical and Dentsply Sirona

0.1

Correlation Coefficient

Futura Medical  Dentsply Sirona

Average diversification

The 3 months correlation between Futura and Dentsply is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Futura Medical and Dentsply Sirona in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dentsply Sirona and Futura Medical 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 Futura Medical are associated (or correlated) with Dentsply Sirona. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dentsply Sirona has no effect on the direction of Futura Medical i.e., Futura Medical and Dentsply Sirona go up and down completely randomly.

Pair Corralation between Futura Medical and Dentsply Sirona

Assuming the 90 days trading horizon Futura Medical is expected to generate 0.71 times more return on investment than Dentsply Sirona. However, Futura Medical is 1.42 times less risky than Dentsply Sirona. It trades about -0.08 of its potential returns per unit of risk. Dentsply Sirona is currently generating about -0.08 per unit of risk. If you would invest  3,967  in Futura Medical on September 2, 2024 and sell it today you would lose (597.00) from holding Futura Medical or give up 15.05% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Futura Medical  vs.  Dentsply Sirona

Futura Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Futura Medical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Dentsply Sirona

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dentsply Sirona has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Futura Medical and Dentsply Sirona

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

The idea behind Futura Medical and Dentsply Sirona 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.