Correlation Between Zimmer Biomet and Express Scripts

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

Diversification Opportunities for Zimmer Biomet and Express Scripts

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  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Zimmer and Express is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Zimmer Biomet Holdings and Express Scripts Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Express Scripts Holding 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 Express Scripts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Express Scripts Holding has no effect on the direction of Zimmer Biomet i.e., Zimmer Biomet and Express Scripts go up and down completely randomly.

Pair Corralation between Zimmer Biomet and Express Scripts

If you would invest  12,730  in Zimmer Biomet Holdings on December 29, 2023 and sell it today you would earn a total of  535.00  from holding Zimmer Biomet Holdings or generate 4.2% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

Zimmer Biomet Holdings  vs.  Express Scripts Holding

 Performance 
       Timeline  
Zimmer Biomet Holdings 

Risk-Adjusted Performance

9 of 100

 
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OK
Compared to the overall equity markets, risk-adjusted returns on investments in Zimmer Biomet Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent fundamental drivers, Zimmer Biomet may actually be approaching a critical reversion point that can send shares even higher in April 2024.
Express Scripts Holding 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Express Scripts Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Express Scripts is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Zimmer Biomet and Express Scripts Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Zimmer Biomet and Express Scripts

The main advantage of trading using opposite Zimmer Biomet and Express Scripts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zimmer Biomet position performs unexpectedly, Express Scripts 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 Express Scripts will offset losses from the drop in Express Scripts' long position.
The idea behind Zimmer Biomet Holdings and Express Scripts Holding 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.

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