Correlation Between Varex Imaging and LeMaitre Vascular

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

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

Diversification Opportunities for Varex Imaging and LeMaitre Vascular

0.84

Correlation Coefficient

Varex Imaging  LeMaitre Vascular

Very poor diversification

The 3 months correlation between Varex and LeMaitre is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Varex Imaging Corp and LeMaitre Vascular in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LeMaitre Vascular and Varex Imaging 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 Varex Imaging Corp are associated (or correlated) with LeMaitre Vascular. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LeMaitre Vascular has no effect on the direction of Varex Imaging i.e., Varex Imaging and LeMaitre Vascular go up and down completely randomly.

Pair Corralation between Varex Imaging and LeMaitre Vascular

Given the investment horizon of 90 days Varex Imaging Corp is expected to generate 1.86 times more return on investment than LeMaitre Vascular. However, Varex Imaging is 1.86 times more volatile than LeMaitre Vascular. It trades about 0.15 of its potential returns per unit of risk. LeMaitre Vascular is currently generating about 0.15 per unit of risk. If you would invest  1,248  in Varex Imaging Corp on August 30, 2024 and sell it today you would earn a total of  405.00  from holding Varex Imaging Corp or generate 32.45% return on investment over 90 days.

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

Varex Imaging Corp  vs.  LeMaitre Vascular

Varex Imaging Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Varex Imaging Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain technical and fundamental indicators, Varex Imaging showed solid returns over the last few months and may actually be approaching a breakup point.

LeMaitre Vascular

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in LeMaitre Vascular are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, LeMaitre Vascular unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Varex Imaging and LeMaitre Vascular

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

The idea behind Varex Imaging Corp and LeMaitre Vascular 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.