Correlation Between Baxter International and Haemonetics

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

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

Diversification Opportunities for Baxter International and Haemonetics

-0.11

Correlation Coefficient

Baxter International  Haemonetics

Good diversification

The 3 months correlation between Baxter and Haemonetics is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Baxter International and Haemonetics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haemonetics and Baxter International 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 Baxter International are associated (or correlated) with Haemonetics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Haemonetics has no effect on the direction of Baxter International i.e., Baxter International and Haemonetics go up and down completely randomly.

Pair Corralation between Baxter International and Haemonetics

Considering the 90-day investment horizon Baxter International is expected to generate 0.99 times more return on investment than Haemonetics. However, Baxter International is 1.01 times less risky than Haemonetics. It trades about -0.03 of its potential returns per unit of risk. Haemonetics is currently generating about -0.15 per unit of risk. If you would invest  3,035  in Baxter International on January 11, 2025 and sell it today you would lose (221.00) from holding Baxter International or give up 7.28% of portfolio value over 90 days.

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

Baxter International  vs.  Haemonetics

Baxter International

Risk-Adjusted Performance

Very Weak

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

Haemonetics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Haemonetics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in May 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Baxter International and Haemonetics

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

The idea behind Baxter International and Haemonetics 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.