Correlation Between Axogen and Establishment Labs
Can any of the company-specific risk be diversified away by investing in both Axogen and Establishment Labs 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 Axogen and Establishment Labs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Axogen Inc and Establishment Labs Holdings, you can compare the effects of market volatilities on Axogen and Establishment Labs 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 Axogen with a short position of Establishment Labs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axogen and Establishment Labs.
Diversification Opportunities for Axogen and Establishment Labs
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Axogen and Establishment is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Axogen Inc and Establishment Labs Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Establishment Labs and Axogen 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 Axogen Inc are associated (or correlated) with Establishment Labs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Establishment Labs has no effect on the direction of Axogen i.e., Axogen and Establishment Labs go up and down completely randomly.
Pair Corralation between Axogen and Establishment Labs
Given the investment horizon of 90 days Axogen Inc is expected to generate 0.68 times more return on investment than Establishment Labs. However, Axogen Inc is 1.47 times less risky than Establishment Labs. It trades about 0.26 of its potential returns per unit of risk. Establishment Labs Holdings is currently generating about -0.26 per unit of risk. If you would invest 1,456 in Axogen Inc on November 7, 2024 and sell it today you would earn a total of 352.00 from holding Axogen Inc or generate 24.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Axogen Inc vs. Establishment Labs Holdings
Performance |
| Timeline |
| Axogen Inc |
| Establishment Labs |
Axogen and Establishment Labs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Axogen and Establishment Labs
The main advantage of trading using opposite Axogen and Establishment Labs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axogen position performs unexpectedly, Establishment Labs 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 Establishment Labs will offset losses from the drop in Establishment Labs' long position.The idea behind Axogen Inc and Establishment Labs Holdings 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.| Establishment Labs vs. Orthopediatrics Corp | Establishment Labs vs. Integer Holdings Corp | Establishment Labs vs. Treace Medical Concepts | Establishment Labs vs. CONMED |
Check out your portfolio center.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.
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