Correlation Between ANT and Zimmer Biomet

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

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

Diversification Opportunities for ANT and Zimmer Biomet

-0.51

Correlation Coefficient

ANT  Zimmer Biomet

Excellent diversification

The 3 months correlation between ANT and Zimmer is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding ANT and Zimmer Biomet Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zimmer Biomet Holdings and ANT 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 ANT are associated (or correlated) with Zimmer Biomet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zimmer Biomet Holdings has no effect on the direction of ANT i.e., ANT and Zimmer Biomet go up and down completely randomly.

Pair Corralation between ANT and Zimmer Biomet

Assuming the 90 days trading horizon ANT is expected to generate 42.5 times more return on investment than Zimmer Biomet. However, ANT is 42.5 times more volatile than Zimmer Biomet Holdings. It trades about 0.1 of its potential returns per unit of risk. Zimmer Biomet Holdings is currently generating about 0.0 per unit of risk. If you would invest  314.00  in ANT on October 24, 2024 and sell it today you would lose (167.00) from holding ANT or give up 53.18% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	59.28%
Values	Daily Returns

ANT  vs.  Zimmer Biomet Holdings

ANT

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ANT are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, ANT exhibited solid returns over the last few months and may actually be approaching a breakup point.

Zimmer Biomet Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Zimmer Biomet Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain primary indicators, Zimmer Biomet may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with ANT and Zimmer Biomet

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

The idea behind ANT and Zimmer Biomet Holdings 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.