Correlation Between Smith Nephew and Integer Holdings

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

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

Diversification Opportunities for Smith Nephew and Integer Holdings

-0.72

Correlation Coefficient

Smith Nephew  Integer Holdings

Pay attention - limited upside

The 3 months correlation between Smith and Integer is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Smith Nephew SNATS and Integer Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Integer Holdings Corp and Smith Nephew 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 Smith Nephew SNATS are associated (or correlated) with Integer Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Integer Holdings Corp has no effect on the direction of Smith Nephew i.e., Smith Nephew and Integer Holdings go up and down completely randomly.

Pair Corralation between Smith Nephew and Integer Holdings

Considering the 90-day investment horizon Smith Nephew is expected to generate 11.16 times less return on investment than Integer Holdings. But when comparing it to its historical volatility, Smith Nephew SNATS is 1.05 times less risky than Integer Holdings. It trades about 0.01 of its potential returns per unit of risk. Integer Holdings Corp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  8,954  in Integer Holdings Corp on September 3, 2024 and sell it today you would earn a total of  4,923  from holding Integer Holdings Corp or generate 54.98% return on investment over 90 days.

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

Smith Nephew SNATS  vs.  Integer Holdings Corp

Smith Nephew SNATS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Smith Nephew SNATS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Integer Holdings Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Integer Holdings Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady technical and fundamental indicators, Integer Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Smith Nephew and Integer Holdings

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

The idea behind Smith Nephew SNATS and Integer Holdings 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.