Correlation Between Cooper Companies, and ResMed

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

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

Diversification Opportunities for Cooper Companies, and ResMed

0.76

Correlation Coefficient

Cooper Companies,  ResMed

Poor diversification

The 3 months correlation between Cooper and ResMed is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding The Cooper Companies, and ResMed Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ResMed Inc and Cooper Companies, 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 The Cooper Companies, are associated (or correlated) with ResMed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ResMed Inc has no effect on the direction of Cooper Companies, i.e., Cooper Companies, and ResMed go up and down completely randomly.

Pair Corralation between Cooper Companies, and ResMed

Considering the 90-day investment horizon The Cooper Companies, is expected to under-perform the ResMed. But the stock apears to be less risky and, when comparing its historical volatility, The Cooper Companies, is 1.17 times less risky than ResMed. The stock trades about -0.15 of its potential returns per unit of risk. The ResMed Inc is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  24,846  in ResMed Inc on November 29, 2024 and sell it today you would lose (1,227) from holding ResMed Inc or give up 4.94% of portfolio value over 90 days.

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

The Cooper Companies,  vs.  ResMed Inc

Cooper Companies,

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Cooper Companies, 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 very healthy which may send shares a bit higher in March 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

ResMed Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days ResMed Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, ResMed is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Cooper Companies, and ResMed

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

The idea behind The Cooper Companies, and ResMed Inc 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.

Check out your portfolio center.

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.