Correlation Between Medtronic PLC and ZimVie

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

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

Diversification Opportunities for Medtronic PLC and ZimVie

0.11

Correlation Coefficient

Medtronic PLC  ZimVie

Average diversification

The 3 months correlation between Medtronic and ZimVie is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Medtronic PLC and ZimVie Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZimVie Inc 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 ZimVie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZimVie Inc has no effect on the direction of Medtronic PLC i.e., Medtronic PLC and ZimVie go up and down completely randomly.

Pair Corralation between Medtronic PLC and ZimVie

Considering the 90-day investment horizon Medtronic PLC is expected to generate 0.55 times more return on investment than ZimVie. However, Medtronic PLC is 1.81 times less risky than ZimVie. It trades about -0.03 of its potential returns per unit of risk. ZimVie Inc is currently generating about -0.13 per unit of risk. If you would invest  8,826  in Medtronic PLC on August 31, 2024 and sell it today you would lose (199.00) from holding Medtronic PLC or give up 2.25% of portfolio value over 90 days.

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

Medtronic PLC  vs.  ZimVie Inc

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 comparatively stable fundamental indicators, Medtronic PLC is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

ZimVie Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ZimVie Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's primary indicators remain fairly stable which may send shares a bit higher in December 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Medtronic PLC and ZimVie

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

The idea behind Medtronic PLC and ZimVie 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.