Correlation Between Medtronic PLC and Ion Beam

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

By analyzing existing cross correlation between Medtronic PLC and Ion Beam Applications, you can compare the effects of market volatilities on Medtronic PLC and Ion Beam 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 Medtronic PLC with a short position of Ion Beam. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medtronic PLC and Ion Beam.

Diversification Opportunities for Medtronic PLC and Ion Beam

0.47

Correlation Coefficient

Medtronic PLC  Ion Beam

Very weak diversification

The 3 months correlation between Medtronic and Ion is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Medtronic PLC and Ion Beam Applications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ion Beam Applications and Medtronic PLC 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 Medtronic PLC are associated (or correlated) with Ion Beam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ion Beam Applications has no effect on the direction of Medtronic PLC i.e., Medtronic PLC and Ion Beam go up and down completely randomly.

Pair Corralation between Medtronic PLC and Ion Beam

Considering the 90-day investment horizon Medtronic PLC is expected to generate 0.52 times more return on investment than Ion Beam. However, Medtronic PLC is 1.93 times less risky than Ion Beam. It trades about -0.14 of its potential returns per unit of risk. Ion Beam Applications is currently generating about -0.09 per unit of risk. If you would invest  8,916  in Medtronic PLC on September 21, 2024 and sell it today you would lose (813.00) from holding Medtronic PLC or give up 9.12% of portfolio value over 90 days.

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

Medtronic PLC  vs.  Ion Beam Applications

Medtronic PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Medtronic PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Ion Beam Applications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ion Beam Applications has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Medtronic PLC and Ion Beam

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

The idea behind Medtronic PLC and Ion Beam Applications 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.