Correlation Between ZimVie and STERIS Plc

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

By analyzing existing cross correlation between ZimVie Inc and STERIS plc, you can compare the effects of market volatilities on ZimVie and STERIS Plc 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 ZimVie with a short position of STERIS Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZimVie and STERIS Plc.

Diversification Opportunities for ZimVie and STERIS Plc

0.67

Correlation Coefficient

ZimVie  STERIS Plc

Poor diversification

The 3 months correlation between ZimVie and STERIS is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding ZimVie Inc and STERIS plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STERIS plc and ZimVie 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 ZimVie Inc are associated (or correlated) with STERIS Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STERIS plc has no effect on the direction of ZimVie i.e., ZimVie and STERIS Plc go up and down completely randomly.

Pair Corralation between ZimVie and STERIS Plc

Given the investment horizon of 90 days ZimVie Inc is expected to generate 3.22 times more return on investment than STERIS Plc. However, ZimVie is 3.22 times more volatile than STERIS plc. It trades about 0.04 of its potential returns per unit of risk. STERIS plc is currently generating about 0.01 per unit of risk. If you would invest  869.00  in ZimVie Inc on October 7, 2024 and sell it today you would earn a total of  530.00  from holding ZimVie Inc or generate 60.99% return on investment over 90 days.

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

ZimVie Inc  vs.  STERIS plc

ZimVie Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ZimVie Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's primary indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

STERIS plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days STERIS plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with ZimVie and STERIS Plc

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

The idea behind ZimVie Inc and STERIS plc 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.

Check out your portfolio center.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.