Correlation Between Smith Nephew and Zimmer Holdings
Can any of the company-specific risk be diversified away by investing in both Smith Nephew and Zimmer Holdings 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 Smith Nephew and Zimmer Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smith Nephew SNATS and Zimmer Holdings, you can compare the effects of market volatilities on Smith Nephew and Zimmer Holdings 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 Smith Nephew with a short position of Zimmer Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smith Nephew and Zimmer Holdings.
Diversification Opportunities for Smith Nephew and Zimmer Holdings
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Smith and Zimmer is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Smith Nephew SNATS and Zimmer Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zimmer Holdings and Smith Nephew 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 Smith Nephew SNATS are associated (or correlated) with Zimmer Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zimmer Holdings has no effect on the direction of Smith Nephew i.e., Smith Nephew and Zimmer Holdings go up and down completely randomly.
Pair Corralation between Smith Nephew and Zimmer Holdings
If you would invest (100.00) in Zimmer Holdings on January 26, 2024 and sell it today you would earn a total of 100.00 from holding Zimmer Holdings or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Smith Nephew SNATS vs. Zimmer Holdings
Performance |
| Timeline |
| Smith Nephew SNATS |
| Zimmer Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Smith Nephew and Zimmer Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smith Nephew and Zimmer Holdings
The main advantage of trading using opposite Smith Nephew and Zimmer Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smith Nephew position performs unexpectedly, Zimmer Holdings 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 Zimmer Holdings will offset losses from the drop in Zimmer Holdings' long position.The idea behind Smith Nephew SNATS and Zimmer Holdings 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.| Zimmer Holdings vs. Vishay Intertechnology | Zimmer Holdings vs. ON Semiconductor | Zimmer Holdings vs. United Microelectronics | Zimmer Holdings vs. NeogamesSA |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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