Correlation Between Axogen and Si Bone
Can any of the company-specific risk be diversified away by investing in both Axogen and Si Bone 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 Si Bone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Axogen Inc and Si Bone, you can compare the effects of market volatilities on Axogen and Si Bone 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 Si Bone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axogen and Si Bone.
Diversification Opportunities for Axogen and Si Bone
Good diversification
The 3 months correlation between Axogen and SIBN is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Axogen Inc and Si Bone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Si Bone 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 Si Bone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Si Bone has no effect on the direction of Axogen i.e., Axogen and Si Bone go up and down completely randomly.
Pair Corralation between Axogen and Si Bone
Given the investment horizon of 90 days Axogen Inc is expected to generate 0.88 times more return on investment than Si Bone. However, Axogen Inc is 1.14 times less risky than Si Bone. It trades about 0.05 of its potential returns per unit of risk. Si Bone is currently generating about -0.08 per unit of risk. If you would invest 1,265 in Axogen Inc on August 28, 2024 and sell it today you would earn a total of 82.00 from holding Axogen Inc or generate 6.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Axogen Inc vs. Si Bone
Performance |
| Timeline |
| Axogen Inc |
| Si Bone |
Axogen and Si Bone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Axogen and Si Bone
The main advantage of trading using opposite Axogen and Si Bone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axogen position performs unexpectedly, Si Bone 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 Si Bone will offset losses from the drop in Si Bone's long position.The idea behind Axogen Inc and Si Bone 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.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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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