Correlation Between Zimmer Biomet and CRAWFORD A

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

Diversification Opportunities for Zimmer Biomet and CRAWFORD A

0.74

Correlation Coefficient

Zimmer Biomet  CRAWFORD A

Poor diversification

The 3 months correlation between Zimmer and CRAWFORD is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Zimmer Biomet Holdings and CRAWFORD A NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CRAWFORD A NV 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 CRAWFORD A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CRAWFORD A NV has no effect on the direction of Zimmer Biomet i.e., Zimmer Biomet and CRAWFORD A go up and down completely randomly.

Pair Corralation between Zimmer Biomet and CRAWFORD A

Assuming the 90 days horizon Zimmer Biomet Holdings is expected to generate 0.42 times more return on investment than CRAWFORD A. However, Zimmer Biomet Holdings is 2.41 times less risky than CRAWFORD A. It trades about -0.16 of its potential returns per unit of risk. CRAWFORD A NV is currently generating about -0.08 per unit of risk. If you would invest  10,545  in Zimmer Biomet Holdings on September 27, 2024 and sell it today you would lose (295.00) from holding Zimmer Biomet Holdings or give up 2.8% of portfolio value over 90 days.

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

Zimmer Biomet Holdings  vs.  CRAWFORD A NV

Zimmer Biomet Holdings

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Zimmer Biomet Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Zimmer Biomet may actually be approaching a critical reversion point that can send shares even higher in January 2025.

CRAWFORD A NV

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CRAWFORD A NV are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward-looking signals, CRAWFORD A reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zimmer Biomet and CRAWFORD A

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

The idea behind Zimmer Biomet Holdings and CRAWFORD A NV 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.