Correlation Between Tandem Diabetes and Bruker

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

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

Diversification Opportunities for Tandem Diabetes and Bruker

0.9

Correlation Coefficient

Tandem Diabetes  Bruker

Almost no diversification

The 3 months correlation between Tandem and Bruker is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Tandem Diabetes Care and Bruker in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bruker and Tandem Diabetes 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 Tandem Diabetes Care are associated (or correlated) with Bruker. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bruker has no effect on the direction of Tandem Diabetes i.e., Tandem Diabetes and Bruker go up and down completely randomly.

Pair Corralation between Tandem Diabetes and Bruker

Given the investment horizon of 90 days Tandem Diabetes Care is expected to under-perform the Bruker. In addition to that, Tandem Diabetes is 2.01 times more volatile than Bruker. It trades about -0.17 of its total potential returns per unit of risk. Bruker is currently generating about -0.19 per unit of volatility. If you would invest  5,844  in Bruker on December 28, 2024 and sell it today you would lose (1,636) from holding Bruker or give up 27.99% of portfolio value over 90 days.

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

Tandem Diabetes Care  vs.  Bruker

Tandem Diabetes Care

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tandem Diabetes Care has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Bruker

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bruker has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's forward-looking signals remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Tandem Diabetes and Bruker

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

The idea behind Tandem Diabetes Care and Bruker 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.