Correlation Between Innovative Eyewear and Straumann Holding

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

By analyzing existing cross correlation between Innovative Eyewear and Straumann Holding AG, you can compare the effects of market volatilities on Innovative Eyewear and Straumann Holding 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 Innovative Eyewear with a short position of Straumann Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovative Eyewear and Straumann Holding.

Diversification Opportunities for Innovative Eyewear and Straumann Holding

0.4

Correlation Coefficient

Innovative Eyewear  Straumann Holding

Very weak diversification

The 3 months correlation between Innovative and Straumann is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Innovative Eyewear and Straumann Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Straumann Holding and Innovative Eyewear 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 Innovative Eyewear are associated (or correlated) with Straumann Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Straumann Holding has no effect on the direction of Innovative Eyewear i.e., Innovative Eyewear and Straumann Holding go up and down completely randomly.

Pair Corralation between Innovative Eyewear and Straumann Holding

Given the investment horizon of 90 days Innovative Eyewear is expected to generate 6.69 times more return on investment than Straumann Holding. However, Innovative Eyewear is 6.69 times more volatile than Straumann Holding AG. It trades about 0.04 of its potential returns per unit of risk. Straumann Holding AG is currently generating about 0.03 per unit of risk. If you would invest  1,550  in Innovative Eyewear on September 13, 2024 and sell it today you would lose (932.00) from holding Innovative Eyewear or give up 60.13% of portfolio value over 90 days.

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

Innovative Eyewear  vs.  Straumann Holding AG

Innovative Eyewear

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Innovative Eyewear are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady fundamental indicators, Innovative Eyewear showed solid returns over the last few months and may actually be approaching a breakup point.

Straumann Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Straumann Holding AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical indicators, Straumann Holding is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Innovative Eyewear and Straumann Holding

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

The idea behind Innovative Eyewear and Straumann Holding AG 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.