Correlation Between Stryker and Varian Medical

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

By analyzing existing cross correlation between Stryker and Varian Medical Systems, you can compare the effects of market volatilities on Stryker and Varian Medical 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 Varian Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stryker and Varian Medical.

Diversification Opportunities for Stryker and Varian Medical

0.0

Correlation Coefficient

Stryker  Varian Medical

Pay attention - limited upside

The 3 months correlation between Stryker and Varian is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Stryker and Varian Medical Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Varian Medical Systems 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 Varian Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Varian Medical Systems has no effect on the direction of Stryker i.e., Stryker and Varian Medical go up and down completely randomly.

Pair Corralation between Stryker and Varian Medical

If you would invest  24,349  in Stryker on January 17, 2024 and sell it today you would earn a total of  9,564  from holding Stryker or generate 39.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Stryker  vs.  Varian Medical Systems

Stryker

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Stryker are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile basic indicators, Stryker may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Varian Medical Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Varian Medical Systems has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Varian Medical is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Stryker and Varian Medical

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

The idea behind Stryker and Varian Medical Systems 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.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.