Correlation Between Medtronic PLC and BrainsWay

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

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

Diversification Opportunities for Medtronic PLC and BrainsWay

-0.79

Correlation Coefficient

Medtronic PLC  BrainsWay

Pay attention - limited upside

The 3 months correlation between Medtronic and BrainsWay is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Medtronic PLC and BrainsWay in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BrainsWay 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 BrainsWay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BrainsWay has no effect on the direction of Medtronic PLC i.e., Medtronic PLC and BrainsWay go up and down completely randomly.

Pair Corralation between Medtronic PLC and BrainsWay

Considering the 90-day investment horizon Medtronic PLC is expected to under-perform the BrainsWay. But the stock apears to be less risky and, when comparing its historical volatility, Medtronic PLC is 21.02 times less risky than BrainsWay. The stock trades about -0.13 of its potential returns per unit of risk. The BrainsWay is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  315.00  in BrainsWay on September 26, 2024 and sell it today you would earn a total of  538.00  from holding BrainsWay or generate 170.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Medtronic PLC  vs.  BrainsWay

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 weak 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.

BrainsWay

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BrainsWay are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, BrainsWay reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Medtronic PLC and BrainsWay

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

The idea behind Medtronic PLC and BrainsWay 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.