Correlation Between Envista Holdings and ICU Medical

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

Diversification Opportunities for Envista Holdings and ICU Medical

-0.27

Correlation Coefficient

Envista Holdings  ICU Medical

Very good diversification

The 3 months correlation between Envista and ICU is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Envista Holdings Corp and ICU Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ICU Medical 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 ICU Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ICU Medical has no effect on the direction of Envista Holdings i.e., Envista Holdings and ICU Medical go up and down completely randomly.

Pair Corralation between Envista Holdings and ICU Medical

Given the investment horizon of 90 days Envista Holdings Corp is expected to under-perform the ICU Medical. But the stock apears to be less risky and, when comparing its historical volatility, Envista Holdings Corp is 1.27 times less risky than ICU Medical. The stock trades about -0.09 of its potential returns per unit of risk. The ICU Medical is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  9,153  in ICU Medical on January 31, 2024 and sell it today you would earn a total of  587.00  from holding ICU Medical or generate 6.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Envista Holdings Corp  vs.  ICU Medical

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 latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

ICU Medical

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ICU Medical are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, ICU Medical may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Envista Holdings and ICU Medical

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

The idea behind Envista Holdings Corp and ICU Medical 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.