Correlation Between LENSAR and Varex Imaging

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

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

Diversification Opportunities for LENSAR and Varex Imaging

-0.35

Correlation Coefficient

LENSAR  Varex Imaging

Very good diversification

The 3 months correlation between LENSAR and Varex is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding LENSAR Inc and Varex Imaging Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Varex Imaging Corp and LENSAR 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 LENSAR Inc are associated (or correlated) with Varex Imaging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Varex Imaging Corp has no effect on the direction of LENSAR i.e., LENSAR and Varex Imaging go up and down completely randomly.

Pair Corralation between LENSAR and Varex Imaging

Given the investment horizon of 90 days LENSAR Inc is expected to generate 1.81 times more return on investment than Varex Imaging. However, LENSAR is 1.81 times more volatile than Varex Imaging Corp. It trades about 0.16 of its potential returns per unit of risk. Varex Imaging Corp is currently generating about -0.07 per unit of risk. If you would invest  866.00  in LENSAR Inc on December 29, 2024 and sell it today you would earn a total of  547.00  from holding LENSAR Inc or generate 63.16% return on investment over 90 days.

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

LENSAR Inc  vs.  Varex Imaging Corp

LENSAR Inc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in LENSAR Inc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, LENSAR reported solid returns over the last few months and may actually be approaching a breakup point.

Varex Imaging Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Varex Imaging Corp 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 technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with LENSAR and Varex Imaging

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

The idea behind LENSAR Inc and Varex Imaging Corp 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.