Correlation Between Smith Nephew and ZimVie

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

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

Diversification Opportunities for Smith Nephew and ZimVie

0.66

Correlation Coefficient

Smith Nephew  ZimVie

Poor diversification

The 3 months correlation between Smith and ZimVie is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Smith Nephew SNATS and ZimVie Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZimVie Inc and Smith Nephew 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 Smith Nephew SNATS are associated (or correlated) with ZimVie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZimVie Inc has no effect on the direction of Smith Nephew i.e., Smith Nephew and ZimVie go up and down completely randomly.

Pair Corralation between Smith Nephew and ZimVie

Considering the 90-day investment horizon Smith Nephew is expected to generate 13.91 times less return on investment than ZimVie. But when comparing it to its historical volatility, Smith Nephew SNATS is 11.51 times less risky than ZimVie. It trades about 0.1 of its potential returns per unit of risk. ZimVie Inc is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  879.00  in ZimVie Inc on May 6, 2025 and sell it today you would earn a total of  1,002  from holding ZimVie Inc or generate 113.99% return on investment over 90 days.

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

Smith Nephew SNATS  vs.  ZimVie Inc

Smith Nephew SNATS

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Smith Nephew SNATS are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Smith Nephew may actually be approaching a critical reversion point that can send shares even higher in September 2025.

ZimVie Inc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ZimVie Inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent primary indicators, ZimVie showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Smith Nephew and ZimVie

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

The idea behind Smith Nephew SNATS and ZimVie Inc 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.