Correlation Between Nuwellis and Stryker

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

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

Diversification Opportunities for Nuwellis and Stryker

0.76

Correlation Coefficient

Nuwellis  Stryker

Poor diversification

The 3 months correlation between Nuwellis and Stryker is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Nuwellis and Stryker in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stryker and Nuwellis 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 Nuwellis are associated (or correlated) with Stryker. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stryker has no effect on the direction of Nuwellis i.e., Nuwellis and Stryker go up and down completely randomly.

Pair Corralation between Nuwellis and Stryker

Given the investment horizon of 90 days Nuwellis is expected to under-perform the Stryker. In addition to that, Nuwellis is 6.87 times more volatile than Stryker. It trades about -0.06 of its total potential returns per unit of risk. Stryker is currently generating about 0.06 per unit of volatility. If you would invest  22,382  in Stryker on February 23, 2024 and sell it today you would earn a total of  10,956  from holding Stryker or generate 48.95% return on investment over 90 days.

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

Nuwellis  vs.  Stryker

Nuwellis

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nuwellis 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 basic indicators remain rather sound which may send shares a bit higher in June 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Stryker

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stryker has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Stryker is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Nuwellis and Stryker

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

The idea behind Nuwellis and Stryker 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.