Correlation Between Envista Holdings and ATRION

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

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

Diversification Opportunities for Envista Holdings and ATRION

-0.62

Correlation Coefficient

Envista Holdings  ATRION

Excellent diversification

The 3 months correlation between Envista and ATRION is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Envista Holdings Corp and ATRION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATRION and Envista Holdings 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 Envista Holdings Corp are associated (or correlated) with ATRION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATRION has no effect on the direction of Envista Holdings i.e., Envista Holdings and ATRION go up and down completely randomly.

Pair Corralation between Envista Holdings and ATRION

Given the investment horizon of 90 days Envista Holdings Corp is expected to under-perform the ATRION. But the stock apears to be less risky and, when comparing its historical volatility, Envista Holdings Corp is 1.75 times less risky than ATRION. The stock trades about -0.1 of its potential returns per unit of risk. The ATRION is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  40,880  in ATRION on February 1, 2024 and sell it today you would earn a total of  1,120  from holding ATRION or generate 2.74% return on investment over 90 days.

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

Envista Holdings Corp  vs.  ATRION

Envista Holdings Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Envista Holdings 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 basic indicators remain comparatively stable which may send shares a bit higher in June 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

ATRION

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ATRION are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, ATRION demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Envista Holdings and ATRION

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

The idea behind Envista Holdings Corp and ATRION 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.