Correlation Between Solventum Corp and Mitesco

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

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

Diversification Opportunities for Solventum Corp and Mitesco

0.08

Correlation Coefficient

Solventum Corp  Mitesco

Significant diversification

The 3 months correlation between Solventum and Mitesco is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Solventum Corp and Mitesco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitesco and Solventum Corp 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 Solventum Corp are associated (or correlated) with Mitesco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitesco has no effect on the direction of Solventum Corp i.e., Solventum Corp and Mitesco go up and down completely randomly.

Pair Corralation between Solventum Corp and Mitesco

Given the investment horizon of 90 days Solventum Corp is expected to under-perform the Mitesco. But the stock apears to be less risky and, when comparing its historical volatility, Solventum Corp is 24.43 times less risky than Mitesco. The stock trades about -0.03 of its potential returns per unit of risk. The Mitesco is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  29.00  in Mitesco on September 14, 2024 and sell it today you would earn a total of  11.00  from holding Mitesco or generate 37.93% return on investment over 90 days.

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

Solventum Corp  vs.  Mitesco

Solventum Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Solventum Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable essential indicators, Solventum Corp is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Mitesco

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mitesco are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal basic indicators, Mitesco demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Solventum Corp and Mitesco

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

The idea behind Solventum Corp and Mitesco 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.