Correlation Between PURETECH HEALTH and Fortive

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

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

Diversification Opportunities for PURETECH HEALTH and Fortive

0.46

Correlation Coefficient

PURETECH HEALTH  Fortive

Very weak diversification

The 3 months correlation between PURETECH and Fortive is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding PURETECH HEALTH PLC and Fortive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortive and PURETECH HEALTH 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 PURETECH HEALTH PLC are associated (or correlated) with Fortive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortive has no effect on the direction of PURETECH HEALTH i.e., PURETECH HEALTH and Fortive go up and down completely randomly.

Pair Corralation between PURETECH HEALTH and Fortive

Assuming the 90 days horizon PURETECH HEALTH is expected to generate 1.06 times less return on investment than Fortive. In addition to that, PURETECH HEALTH is 2.37 times more volatile than Fortive. It trades about 0.03 of its total potential returns per unit of risk. Fortive is currently generating about 0.07 per unit of volatility. If you would invest  7,021  in Fortive on October 11, 2024 and sell it today you would earn a total of  355.00  from holding Fortive or generate 5.06% return on investment over 90 days.

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

PURETECH HEALTH PLC  vs.  Fortive

PURETECH HEALTH PLC

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PURETECH HEALTH PLC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, PURETECH HEALTH is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Fortive

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fortive are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Fortive is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with PURETECH HEALTH and Fortive

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

The idea behind PURETECH HEALTH PLC and Fortive 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.