Correlation Between Varex Imaging and Quipt Home

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

Diversification Opportunities for Varex Imaging and Quipt Home

0.69

Correlation Coefficient

Varex Imaging  Quipt Home

Poor diversification

The 3 months correlation between Varex and Quipt is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Varex Imaging Corp and Quipt Home Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quipt Home Medical 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 Quipt Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quipt Home Medical has no effect on the direction of Varex Imaging i.e., Varex Imaging and Quipt Home go up and down completely randomly.

Pair Corralation between Varex Imaging and Quipt Home

Given the investment horizon of 90 days Varex Imaging Corp is expected to under-perform the Quipt Home. But the stock apears to be less risky and, when comparing its historical volatility, Varex Imaging Corp is 1.02 times less risky than Quipt Home. The stock trades about -0.09 of its potential returns per unit of risk. The Quipt Home Medical is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  260.00  in Quipt Home Medical on December 27, 2024 and sell it today you would lose (22.00) from holding Quipt Home Medical or give up 8.46% of portfolio value over 90 days.

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

Varex Imaging Corp  vs.  Quipt Home Medical

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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Quipt Home Medical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Quipt Home Medical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Quipt Home 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 Varex Imaging and Quipt Home

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

The idea behind Varex Imaging Corp and Quipt Home Medical 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.