Correlation Between ResMed and Stryker
Can any of the company-specific risk be diversified away by investing in both ResMed and Stryker 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 ResMed and Stryker into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ResMed Inc and Stryker, you can compare the effects of market volatilities on ResMed and Stryker 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 ResMed with a short position of Stryker. Check out your portfolio center. Please also check ongoing floating volatility patterns of ResMed and Stryker.
Diversification Opportunities for ResMed and Stryker
Very weak diversification
The 3 months correlation between ResMed and Stryker is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding ResMed Inc and Stryker in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stryker and ResMed 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 ResMed Inc are associated (or correlated) with Stryker. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stryker has no effect on the direction of ResMed i.e., ResMed and Stryker go up and down completely randomly.
Pair Corralation between ResMed and Stryker
Considering the 90-day investment horizon ResMed Inc is expected to under-perform the Stryker. In addition to that, ResMed is 2.18 times more volatile than Stryker. It trades about -0.16 of its total potential returns per unit of risk. Stryker is currently generating about -0.33 per unit of volatility. If you would invest 35,238 in Stryker on January 20, 2024 and sell it today you would lose (2,493) from holding Stryker or give up 7.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
ResMed Inc vs. Stryker
Performance |
| Timeline |
| ResMed Inc |
| Stryker |
ResMed and Stryker Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ResMed and Stryker
The main advantage of trading using opposite ResMed and Stryker positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ResMed position performs unexpectedly, Stryker 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 Stryker will offset losses from the drop in Stryker's long position.| ResMed vs. Agilent Technologies | ResMed vs. Illumina | ResMed vs. Waters | ResMed vs. Thermo Fisher Scientific |
| Stryker vs. Agilent Technologies | Stryker vs. Illumina | Stryker vs. Waters | Stryker vs. Thermo Fisher Scientific |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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