Correlation Between Zimmer Biomet and Bone Biologics

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

By analyzing existing cross correlation between Zimmer Biomet Holdings and Bone Biologics Corp, you can compare the effects of market volatilities on Zimmer Biomet and Bone Biologics 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 Zimmer Biomet with a short position of Bone Biologics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zimmer Biomet and Bone Biologics.

Diversification Opportunities for Zimmer Biomet and Bone Biologics

-0.3

Correlation Coefficient

Zimmer Biomet  Bone Biologics

Very good diversification

The 3 months correlation between Zimmer and Bone is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Zimmer Biomet Holdings and Bone Biologics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bone Biologics Corp and Zimmer Biomet 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 Zimmer Biomet Holdings are associated (or correlated) with Bone Biologics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bone Biologics Corp has no effect on the direction of Zimmer Biomet i.e., Zimmer Biomet and Bone Biologics go up and down completely randomly.

Pair Corralation between Zimmer Biomet and Bone Biologics

Considering the 90-day investment horizon Zimmer Biomet Holdings is expected to generate 0.31 times more return on investment than Bone Biologics. However, Zimmer Biomet Holdings is 3.19 times less risky than Bone Biologics. It trades about 0.05 of its potential returns per unit of risk. Bone Biologics Corp is currently generating about -0.01 per unit of risk. If you would invest  10,663  in Zimmer Biomet Holdings on December 27, 2024 and sell it today you would earn a total of  401.00  from holding Zimmer Biomet Holdings or generate 3.76% return on investment over 90 days.

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

Zimmer Biomet Holdings  vs.  Bone Biologics Corp

Zimmer Biomet Holdings

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Zimmer Biomet Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental drivers, Zimmer Biomet is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Bone Biologics Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bone Biologics Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, Bone Biologics is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Zimmer Biomet and Bone Biologics

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

The idea behind Zimmer Biomet Holdings and Bone Biologics Corp 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.