Correlation Between Medtronic PLC and Heartbeam Warrant

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

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

Diversification Opportunities for Medtronic PLC and Heartbeam Warrant

-0.63

Correlation Coefficient

Medtronic PLC  Heartbeam Warrant

Excellent diversification

The 3 months correlation between Medtronic and Heartbeam is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Medtronic PLC and Heartbeam Warrant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heartbeam Warrant and Medtronic PLC 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 Medtronic PLC are associated (or correlated) with Heartbeam Warrant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heartbeam Warrant has no effect on the direction of Medtronic PLC i.e., Medtronic PLC and Heartbeam Warrant go up and down completely randomly.

Pair Corralation between Medtronic PLC and Heartbeam Warrant

Considering the 90-day investment horizon Medtronic PLC is expected to under-perform the Heartbeam Warrant. But the stock apears to be less risky and, when comparing its historical volatility, Medtronic PLC is 8.72 times less risky than Heartbeam Warrant. The stock trades about -0.37 of its potential returns per unit of risk. The Heartbeam Warrant is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  70.00  in Heartbeam Warrant on September 19, 2024 and sell it today you would earn a total of  12.00  from holding Heartbeam Warrant or generate 17.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Medtronic PLC  vs.  Heartbeam Warrant

Medtronic PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Medtronic PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Heartbeam Warrant

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Heartbeam Warrant are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, Heartbeam Warrant showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Medtronic PLC and Heartbeam Warrant

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

The idea behind Medtronic PLC and Heartbeam Warrant 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.