Correlation Between Medtronic PLC and TruBridge

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

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

Diversification Opportunities for Medtronic PLC and TruBridge

0.82

Correlation Coefficient

Medtronic PLC  TruBridge

Very poor diversification

The 3 months correlation between Medtronic and TruBridge is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Medtronic PLC and TruBridge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TruBridge 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 TruBridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TruBridge has no effect on the direction of Medtronic PLC i.e., Medtronic PLC and TruBridge go up and down completely randomly.

Pair Corralation between Medtronic PLC and TruBridge

Considering the 90-day investment horizon Medtronic PLC is expected to generate 3.56 times less return on investment than TruBridge. But when comparing it to its historical volatility, Medtronic PLC is 1.71 times less risky than TruBridge. It trades about 0.11 of its potential returns per unit of risk. TruBridge is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  1,932  in TruBridge on December 30, 2024 and sell it today you would earn a total of  879.00  from holding TruBridge or generate 45.5% return on investment over 90 days.

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

Medtronic PLC  vs.  TruBridge

Medtronic PLC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Medtronic PLC are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental indicators, Medtronic PLC may actually be approaching a critical reversion point that can send shares even higher in April 2025.

TruBridge

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TruBridge are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, TruBridge reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Medtronic PLC and TruBridge

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

The idea behind Medtronic PLC and TruBridge 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.