Correlation Between Varex Imaging and Myomo

Can any of the company-specific risk be diversified away by investing in both Varex Imaging and Myomo 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 Myomo 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 Myomo Inc, you can compare the effects of market volatilities on Varex Imaging and Myomo 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 Myomo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Varex Imaging and Myomo.

Diversification Opportunities for Varex Imaging and Myomo

0.84

Correlation Coefficient

Varex Imaging  Myomo

Very poor diversification

The 3 months correlation between Varex and Myomo is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Varex Imaging Corp and Myomo Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Myomo Inc 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 Myomo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Myomo Inc has no effect on the direction of Varex Imaging i.e., Varex Imaging and Myomo go up and down completely randomly.

Pair Corralation between Varex Imaging and Myomo

Given the investment horizon of 90 days Varex Imaging Corp is expected to under-perform the Myomo. But the stock apears to be less risky and, when comparing its historical volatility, Varex Imaging Corp is 2.83 times less risky than Myomo. The stock trades about -0.04 of its potential returns per unit of risk. The Myomo Inc is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  80.00  in Myomo Inc on September 12, 2024 and sell it today you would earn a total of  541.00  from holding Myomo Inc or generate 676.25% return on investment over 90 days.

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

Varex Imaging Corp  vs.  Myomo Inc

Varex Imaging Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Varex Imaging Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain technical and fundamental indicators, Varex Imaging showed solid returns over the last few months and may actually be approaching a breakup point.

Myomo Inc

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Myomo Inc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Myomo displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Varex Imaging and Myomo

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

The idea behind Varex Imaging Corp and Myomo 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.

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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.