Correlation Between Avanos Medical and Carsales

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

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

Diversification Opportunities for Avanos Medical and Carsales

-0.25

Correlation Coefficient

Avanos Medical  Carsales

Very good diversification

The 3 months correlation between Avanos and Carsales is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Avanos Medical and Carsales in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carsales and Avanos 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 Avanos Medical are associated (or correlated) with Carsales. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carsales has no effect on the direction of Avanos Medical i.e., Avanos Medical and Carsales go up and down completely randomly.

Pair Corralation between Avanos Medical and Carsales

Assuming the 90 days trading horizon Avanos Medical is expected to under-perform the Carsales. In addition to that, Avanos Medical is 1.27 times more volatile than Carsales. It trades about -0.08 of its total potential returns per unit of risk. Carsales is currently generating about 0.06 per unit of volatility. If you would invest  1,950  in Carsales on May 7, 2025 and sell it today you would earn a total of  130.00  from holding Carsales or generate 6.67% return on investment over 90 days.

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

Avanos Medical  vs.  Carsales

Avanos Medical

Risk-Adjusted Performance

Weakest

Over the last 90 days Avanos Medical 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.

Carsales

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Carsales are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Carsales may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Avanos Medical and Carsales

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

The idea behind Avanos Medical and Carsales 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.