Correlation Between Solventum Corp and Signify Health
Can any of the company-specific risk be diversified away by investing in both Solventum Corp and Signify Health 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 Signify Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solventum Corp and Signify Health, you can compare the effects of market volatilities on Solventum Corp and Signify Health 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 Signify Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solventum Corp and Signify Health.
Diversification Opportunities for Solventum Corp and Signify Health
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Solventum and Signify is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Solventum Corp and Signify Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Signify Health 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 Signify Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Signify Health has no effect on the direction of Solventum Corp i.e., Solventum Corp and Signify Health go up and down completely randomly.
Pair Corralation between Solventum Corp and Signify Health
Given the investment horizon of 90 days Solventum Corp is expected to under-perform the Signify Health. In addition to that, Solventum Corp is 2.36 times more volatile than Signify Health. It trades about -0.04 of its total potential returns per unit of risk. Signify Health is currently generating about 0.13 per unit of volatility. If you would invest 2,848 in Signify Health on September 26, 2024 and sell it today you would earn a total of 201.00 from holding Signify Health or generate 7.06% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 31.58% |
Values | Daily Returns |
Solventum Corp vs. Signify Health
Performance |
Timeline |
Solventum Corp |
Signify Health |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Solventum Corp and Signify Health Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Solventum Corp and Signify Health
The main advantage of trading using opposite Solventum Corp and Signify Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solventum Corp position performs unexpectedly, Signify Health 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 Signify Health will offset losses from the drop in Signify Health's long position.Solventum Corp vs. Cigna Corp | Solventum Corp vs. Definitive Healthcare Corp | Solventum Corp vs. Guardant Health | Solventum Corp vs. Laboratory of |
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Check out your portfolio center.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.
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