Correlation Between Varex Imaging and 908 Devices

Can any of the company-specific risk be diversified away by investing in both Varex Imaging and 908 Devices 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 Varex Imaging and 908 Devices into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Varex Imaging Corp and 908 Devices, you can compare the effects of market volatilities on Varex Imaging and 908 Devices 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 Varex Imaging with a short position of 908 Devices. Check out your portfolio center. Please also check ongoing floating volatility patterns of Varex Imaging and 908 Devices.

Diversification Opportunities for Varex Imaging and 908 Devices

0.01

Correlation Coefficient

Varex Imaging  908 Devices

Significant diversification

The 3 months correlation between Varex and 908 is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Varex Imaging Corp and 908 Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 908 Devices and Varex Imaging 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 Varex Imaging Corp are associated (or correlated) with 908 Devices. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 908 Devices has no effect on the direction of Varex Imaging i.e., Varex Imaging and 908 Devices go up and down completely randomly.

Pair Corralation between Varex Imaging and 908 Devices

Given the investment horizon of 90 days Varex Imaging Corp is expected to under-perform the 908 Devices. But the stock apears to be less risky and, when comparing its historical volatility, Varex Imaging Corp is 2.41 times less risky than 908 Devices. The stock trades about -0.1 of its potential returns per unit of risk. The 908 Devices is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  274.00  in 908 Devices on November 28, 2024 and sell it today you would lose (19.00) from holding 908 Devices or give up 6.93% of portfolio value over 90 days.

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

Varex Imaging Corp  vs.  908 Devices

Varex Imaging Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Varex Imaging Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

908 Devices

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in 908 Devices are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, 908 Devices may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Varex Imaging and 908 Devices

The main advantage of trading using opposite Varex Imaging and 908 Devices positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Varex Imaging position performs unexpectedly, 908 Devices 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 908 Devices will offset losses from the drop in 908 Devices' long position.

The idea behind Varex Imaging Corp and 908 Devices 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.