Correlation Between Bioventus and Bluejay Diagnostics

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

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

Diversification Opportunities for Bioventus and Bluejay Diagnostics

0.12

Correlation Coefficient

Bioventus  Bluejay Diagnostics

Average diversification

The 3 months correlation between Bioventus and Bluejay is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Bioventus and Bluejay Diagnostics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bluejay Diagnostics and Bioventus 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 Bioventus are associated (or correlated) with Bluejay Diagnostics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bluejay Diagnostics has no effect on the direction of Bioventus i.e., Bioventus and Bluejay Diagnostics go up and down completely randomly.

Pair Corralation between Bioventus and Bluejay Diagnostics

Considering the 90-day investment horizon Bioventus is expected to generate 0.93 times more return on investment than Bluejay Diagnostics. However, Bioventus is 1.07 times less risky than Bluejay Diagnostics. It trades about 0.28 of its potential returns per unit of risk. Bluejay Diagnostics is currently generating about -0.11 per unit of risk. If you would invest  431.00  in Bioventus on February 23, 2024 and sell it today you would earn a total of  199.00  from holding Bioventus or generate 46.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Bioventus  vs.  Bluejay Diagnostics

Bioventus

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bioventus are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Bioventus unveiled solid returns over the last few months and may actually be approaching a breakup point.

Bluejay Diagnostics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bluejay Diagnostics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Bioventus and Bluejay Diagnostics

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

The idea behind Bioventus and Bluejay Diagnostics 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.