Correlation Between STRYKER and Waters

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

By analyzing existing cross correlation between STRYKER P 4625 and Waters, you can compare the effects of market volatilities on STRYKER and Waters 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 STRYKER with a short position of Waters. Check out your portfolio center. Please also check ongoing floating volatility patterns of STRYKER and Waters.

Diversification Opportunities for STRYKER and Waters

-0.4

Correlation Coefficient

STRYKER  Waters

Very good diversification

The 3 months correlation between STRYKER and Waters is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding STRYKER P 4625 and Waters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waters and STRYKER 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 STRYKER P 4625 are associated (or correlated) with Waters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waters has no effect on the direction of STRYKER i.e., STRYKER and Waters go up and down completely randomly.

Pair Corralation between STRYKER and Waters

Assuming the 90 days trading horizon STRYKER P 4625 is expected to under-perform the Waters. But the bond apears to be less risky and, when comparing its historical volatility, STRYKER P 4625 is 3.91 times less risky than Waters. The bond trades about -0.07 of its potential returns per unit of risk. The Waters is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  33,131  in Waters on September 5, 2024 and sell it today you would earn a total of  5,569  from holding Waters or generate 16.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	81.25%
Values	Daily Returns

STRYKER P 4625  vs.  Waters

STRYKER P 4625

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days STRYKER P 4625 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, STRYKER is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Waters

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Waters are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Waters unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with STRYKER and Waters

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

The idea behind STRYKER P 4625 and Waters 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.