Correlation Between Apple and Avanos Medical

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

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

Diversification Opportunities for Apple and Avanos Medical

0.67

Correlation Coefficient

Apple  Avanos Medical

Poor diversification

The 3 months correlation between Apple and Avanos is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Avanos Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avanos Medical and Apple 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 Apple Inc are associated (or correlated) with Avanos Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avanos Medical has no effect on the direction of Apple i.e., Apple and Avanos Medical go up and down completely randomly.

Pair Corralation between Apple and Avanos Medical

Assuming the 90 days trading horizon Apple Inc is expected to under-perform the Avanos Medical. But the stock apears to be less risky and, when comparing its historical volatility, Apple Inc is 1.06 times less risky than Avanos Medical. The stock trades about -0.15 of its potential returns per unit of risk. The Avanos Medical is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  1,500  in Avanos Medical on December 30, 2024 and sell it today you would lose (190.00) from holding Avanos Medical or give up 12.67% of portfolio value over 90 days.

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

Apple Inc  vs.  Avanos Medical

Apple Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Apple Inc 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 fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Avanos Medical

Risk-Adjusted Performance

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 latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Apple and Avanos Medical

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

The idea behind Apple Inc and Avanos Medical 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.