Correlation Between Baxter International and Sector 10
Can any of the company-specific risk be diversified away by investing in both Baxter International and Sector 10 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 Baxter International and Sector 10 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baxter International and Sector 10, you can compare the effects of market volatilities on Baxter International and Sector 10 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 Baxter International with a short position of Sector 10. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baxter International and Sector 10.
Diversification Opportunities for Baxter International and Sector 10
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Baxter and Sector is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Baxter International and Sector 10 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sector 10 and Baxter International 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 Baxter International are associated (or correlated) with Sector 10. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sector 10 has no effect on the direction of Baxter International i.e., Baxter International and Sector 10 go up and down completely randomly.
Pair Corralation between Baxter International and Sector 10
If you would invest 0.01 in Sector 10 on January 26, 2024 and sell it today you would earn a total of 0.00 from holding Sector 10 or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baxter International vs. Sector 10
Performance |
| Timeline |
| Baxter International |
| Sector 10 |
Baxter International and Sector 10 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baxter International and Sector 10
The main advantage of trading using opposite Baxter International and Sector 10 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baxter International position performs unexpectedly, Sector 10 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 Sector 10 will offset losses from the drop in Sector 10's long position.| Baxter International vs. Embecta Corp | Baxter International vs. West Pharmaceutical Services | Baxter International vs. ResMed Inc | Baxter International vs. The Cooper Companies |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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