Correlation Between Medtronic PLC and XTANT MEDICAL

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

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

Diversification Opportunities for Medtronic PLC and XTANT MEDICAL

0.16

Correlation Coefficient

Medtronic PLC  XTANT MEDICAL

Average diversification

The 3 months correlation between Medtronic and XTANT is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Medtronic PLC and XTANT MEDICAL HLDGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XTANT MEDICAL HLDGS 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 XTANT MEDICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XTANT MEDICAL HLDGS has no effect on the direction of Medtronic PLC i.e., Medtronic PLC and XTANT MEDICAL go up and down completely randomly.

Pair Corralation between Medtronic PLC and XTANT MEDICAL

Assuming the 90 days horizon Medtronic PLC is expected to generate 2.81 times less return on investment than XTANT MEDICAL. But when comparing it to its historical volatility, Medtronic PLC is 4.28 times less risky than XTANT MEDICAL. It trades about 0.03 of its potential returns per unit of risk. XTANT MEDICAL HLDGS is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  54.00  in XTANT MEDICAL HLDGS on October 14, 2024 and sell it today you would lose (11.00) from holding XTANT MEDICAL HLDGS or give up 20.37% of portfolio value over 90 days.

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

Medtronic PLC  vs.  XTANT MEDICAL HLDGS

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. Despite nearly stable basic indicators, Medtronic PLC is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

XTANT MEDICAL HLDGS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days XTANT MEDICAL HLDGS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Medtronic PLC and XTANT MEDICAL

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

The idea behind Medtronic PLC and XTANT MEDICAL HLDGS 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.