Correlation Between Avanos Medical and Canadian Natural

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

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

Diversification Opportunities for Avanos Medical and Canadian Natural

0.34

Correlation Coefficient

Avanos Medical  Canadian Natural

Weak diversification

The 3 months correlation between Avanos and Canadian is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Avanos Medical and Canadian Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Natural Res and Avanos Medical 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 Avanos Medical are associated (or correlated) with Canadian Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Natural Res has no effect on the direction of Avanos Medical i.e., Avanos Medical and Canadian Natural go up and down completely randomly.

Pair Corralation between Avanos Medical and Canadian Natural

Assuming the 90 days trading horizon Avanos Medical is expected to generate 1.78 times more return on investment than Canadian Natural. However, Avanos Medical is 1.78 times more volatile than Canadian Natural Resources. It trades about -0.2 of its potential returns per unit of risk. Canadian Natural Resources is currently generating about -0.42 per unit of risk. If you would invest  1,750  in Avanos Medical on September 23, 2024 and sell it today you would lose (190.00) from holding Avanos Medical or give up 10.86% of portfolio value over 90 days.

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

Avanos Medical  vs.  Canadian Natural Resources

Avanos Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Avanos Medical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Canadian Natural Res

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Canadian Natural Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Canadian Natural is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Avanos Medical and Canadian Natural

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

The idea behind Avanos Medical and Canadian Natural Resources 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.