Correlation Between Shockwave Medical and Medtronic PLC

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

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

Diversification Opportunities for Shockwave Medical and Medtronic PLC

0.0

Correlation Coefficient

Shockwave Medical  Medtronic PLC

Pay attention - limited upside

The 3 months correlation between Shockwave and Medtronic is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Shockwave Medical and Medtronic PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medtronic PLC and Shockwave Medical 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 Shockwave Medical are associated (or correlated) with Medtronic PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medtronic PLC has no effect on the direction of Shockwave Medical i.e., Shockwave Medical and Medtronic PLC go up and down completely randomly.

Pair Corralation between Shockwave Medical and Medtronic PLC

If you would invest  8,580  in Medtronic PLC on November 28, 2024 and sell it today you would earn a total of  437.00  from holding Medtronic PLC or generate 5.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Shockwave Medical  vs.  Medtronic PLC

Shockwave Medical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shockwave Medical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Shockwave Medical is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Medtronic PLC

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Medtronic PLC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with Shockwave Medical and Medtronic PLC

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

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