Correlation Between Medtronic PLC and Beyond Air

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

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

Diversification Opportunities for Medtronic PLC and Beyond Air

0.69

Correlation Coefficient

Medtronic PLC  Beyond Air

Poor diversification

The 3 months correlation between Medtronic and Beyond is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Medtronic PLC and Beyond Air in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beyond Air and Medtronic PLC 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 Medtronic PLC are associated (or correlated) with Beyond Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beyond Air has no effect on the direction of Medtronic PLC i.e., Medtronic PLC and Beyond Air go up and down completely randomly.

Pair Corralation between Medtronic PLC and Beyond Air

Considering the 90-day investment horizon Medtronic PLC is expected to generate 0.22 times more return on investment than Beyond Air. However, Medtronic PLC is 4.46 times less risky than Beyond Air. It trades about 0.01 of its potential returns per unit of risk. Beyond Air is currently generating about -0.08 per unit of risk. If you would invest  7,946  in Medtronic PLC on February 9, 2024 and sell it today you would earn a total of  209.00  from holding Medtronic PLC or generate 2.63% return on investment over 90 days.

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

Medtronic PLC  vs.  Beyond Air

Medtronic PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Medtronic PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Medtronic PLC is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Beyond Air

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Beyond Air has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's forward indicators remain relatively invariable which may send shares a bit higher in June 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Medtronic PLC and Beyond Air

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

The idea behind Medtronic PLC and Beyond Air 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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.