Correlation Between AngioDynamics and AmerisourceBergen

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

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

Diversification Opportunities for AngioDynamics and AmerisourceBergen

-0.39

Correlation Coefficient

AngioDynamics  AmerisourceBergen

Very good diversification

The 3 months correlation between AngioDynamics and AmerisourceBergen is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding AngioDynamics and AmerisourceBergen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AmerisourceBergen and AngioDynamics 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 AngioDynamics are associated (or correlated) with AmerisourceBergen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AmerisourceBergen has no effect on the direction of AngioDynamics i.e., AngioDynamics and AmerisourceBergen go up and down completely randomly.

Pair Corralation between AngioDynamics and AmerisourceBergen

Given the investment horizon of 90 days AngioDynamics is expected to under-perform the AmerisourceBergen. In addition to that, AngioDynamics is 2.5 times more volatile than AmerisourceBergen. It trades about -0.06 of its total potential returns per unit of risk. AmerisourceBergen is currently generating about 0.04 per unit of volatility. If you would invest  15,621  in AmerisourceBergen on January 26, 2024 and sell it today you would earn a total of  2,377  from holding AmerisourceBergen or generate 15.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	67.0%
Values	Daily Returns

AngioDynamics  vs.  AmerisourceBergen

AngioDynamics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AngioDynamics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, AngioDynamics is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

AmerisourceBergen

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AmerisourceBergen has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, AmerisourceBergen is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with AngioDynamics and AmerisourceBergen

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

The idea behind AngioDynamics and AmerisourceBergen 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.