Correlation Between Resmed and Dentsply Sirona

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

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

Diversification Opportunities for Resmed and Dentsply Sirona

-0.59

Correlation Coefficient

Resmed  Dentsply Sirona

Excellent diversification

The 3 months correlation between Resmed and Dentsply is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Resmed Inc DRC and Dentsply Sirona in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dentsply Sirona and Resmed 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 Resmed Inc DRC are associated (or correlated) with Dentsply Sirona. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dentsply Sirona has no effect on the direction of Resmed i.e., Resmed and Dentsply Sirona go up and down completely randomly.

Pair Corralation between Resmed and Dentsply Sirona

Assuming the 90 days trading horizon Resmed Inc DRC is expected to generate 0.4 times more return on investment than Dentsply Sirona. However, Resmed Inc DRC is 2.5 times less risky than Dentsply Sirona. It trades about 0.06 of its potential returns per unit of risk. Dentsply Sirona is currently generating about -0.06 per unit of risk. If you would invest  2,075  in Resmed Inc DRC on October 8, 2024 and sell it today you would earn a total of  105.00  from holding Resmed Inc DRC or generate 5.06% return on investment over 90 days.

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

Resmed Inc DRC  vs.  Dentsply Sirona

Resmed Inc DRC

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Resmed Inc DRC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Resmed is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Dentsply Sirona

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dentsply Sirona has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Resmed and Dentsply Sirona

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

The idea behind Resmed Inc DRC and Dentsply Sirona 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..