Correlation Between Stryker and Dentsply Sirona
Can any of the company-specific risk be diversified away by investing in both Stryker and Dentsply Sirona 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 Dentsply Sirona into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stryker and Dentsply Sirona, you can compare the effects of market volatilities on Stryker and Dentsply Sirona 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 Dentsply Sirona. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stryker and Dentsply Sirona.
Diversification Opportunities for Stryker and Dentsply Sirona
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Stryker and Dentsply is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Stryker and Dentsply Sirona in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dentsply Sirona 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 are associated (or correlated) with Dentsply Sirona. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dentsply Sirona has no effect on the direction of Stryker i.e., Stryker and Dentsply Sirona go up and down completely randomly.
Pair Corralation between Stryker and Dentsply Sirona
Considering the 90-day investment horizon Stryker is expected to generate 0.65 times more return on investment than Dentsply Sirona. However, Stryker is 1.54 times less risky than Dentsply Sirona. It trades about -0.23 of its potential returns per unit of risk. Dentsply Sirona is currently generating about -0.32 per unit of risk. If you would invest 34,738 in Stryker on February 4, 2024 and sell it today you would lose (1,893) from holding Stryker or give up 5.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stryker vs. Dentsply Sirona
Performance |
| Timeline |
| Stryker |
| Dentsply Sirona |
Stryker and Dentsply Sirona Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stryker and Dentsply Sirona
The main advantage of trading using opposite Stryker and Dentsply Sirona positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stryker position performs unexpectedly, Dentsply Sirona 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 Dentsply Sirona will offset losses from the drop in Dentsply Sirona's long position.| Stryker vs. Boston Scientific Corp | Stryker vs. Abbott Laboratories | Stryker vs. Medtronic PLC | Stryker vs. DexCom Inc |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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