Correlation Between Wright Medical and ABIOMED

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

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

Diversification Opportunities for Wright Medical and ABIOMED

0.0

Correlation Coefficient

Wright Medical  ABIOMED

Pay attention - limited upside

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

Pair Corralation between Wright Medical and ABIOMED

If you would invest (100.00) in ABIOMED on February 2, 2024 and sell it today you would earn a total of  100.00  from holding ABIOMED or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Wright Medical Group  vs.  ABIOMED

Wright Medical Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wright Medical Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Wright Medical is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

ABIOMED

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ABIOMED has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, ABIOMED is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Wright Medical and ABIOMED

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

The idea behind Wright Medical Group and ABIOMED 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.