Can any of the company-specific risk be diversified away by investing in both Vivos Therapeutics and Bioventus 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 Vivos Therapeutics and Bioventus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vivos Therapeutics and Bioventus, you can compare the effects of market volatilities on Vivos Therapeutics and Bioventus 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 Vivos Therapeutics with a short position of Bioventus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vivos Therapeutics and Bioventus.
Diversification Opportunities for Vivos Therapeutics and Bioventus
The 3 months correlation between Vivos and Bioventus is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Vivos Therapeutics and Bioventus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bioventus and Vivos Therapeutics 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 Vivos Therapeutics are associated (or correlated) with Bioventus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bioventus has no effect on the direction of Vivos Therapeutics i.e., Vivos Therapeutics and Bioventus go up and down completely randomly.
Pair Corralation between Vivos Therapeutics and Bioventus
Given the investment horizon of 90 days Vivos Therapeutics is expected to under-perform the Bioventus. In addition to that, Vivos Therapeutics is 1.33 times more volatile than Bioventus. It trades about -0.18 of its total potential returns per unit of risk. Bioventus is currently generating about 0.11 per unit of volatility. If you would invest 516.00 in Bioventus on March 6, 2024 and sell it today you would earn a total of 152.00 from holding Bioventus or generate 29.46% return on investment over 90 days.
Over the last 90 days Vivos Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in July 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.
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 abnormal basic indicators, Bioventus unveiled solid returns over the last few months and may actually be approaching a breakup point.