Correlation Between ICU Medical and AngioDynamics

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

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

Diversification Opportunities for ICU Medical and AngioDynamics

-0.04

Correlation Coefficient

ICU Medical  AngioDynamics

Good diversification

The 3 months correlation between ICU and AngioDynamics is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding ICU Medical and AngioDynamics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AngioDynamics and ICU 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 ICU Medical are associated (or correlated) with AngioDynamics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AngioDynamics has no effect on the direction of ICU Medical i.e., ICU Medical and AngioDynamics go up and down completely randomly.

Pair Corralation between ICU Medical and AngioDynamics

Given the investment horizon of 90 days ICU Medical is expected to generate about the same return on investment as AngioDynamics. But, ICU Medical is 2.15 times less risky than AngioDynamics. It trades about -0.01 of its potential returns per unit of risk. AngioDynamics is currently generating about -0.01 per unit of risk. If you would invest  640.00  in AngioDynamics on February 4, 2024 and sell it today you would lose (13.00) from holding AngioDynamics or give up 2.03% of portfolio value over 90 days.

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

ICU Medical  vs.  AngioDynamics

ICU Medical

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ICU Medical are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, ICU Medical demonstrated solid returns over the last few months and may actually be approaching a breakup point.

AngioDynamics

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AngioDynamics are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, AngioDynamics may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with ICU Medical and AngioDynamics

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

The idea behind ICU Medical and AngioDynamics 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.