Correlation Between Cutera and Venus Concept
Can any of the company-specific risk be diversified away by investing in both Cutera and Venus Concept 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 Cutera and Venus Concept into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cutera Inc and Venus Concept, you can compare the effects of market volatilities on Cutera and Venus Concept 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 Cutera with a short position of Venus Concept. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cutera and Venus Concept.
Diversification Opportunities for Cutera and Venus Concept
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cutera and Venus is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Cutera Inc and Venus Concept in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Venus Concept and Cutera 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 Cutera Inc are associated (or correlated) with Venus Concept. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Venus Concept has no effect on the direction of Cutera i.e., Cutera and Venus Concept go up and down completely randomly.
Pair Corralation between Cutera and Venus Concept
Given the investment horizon of 90 days Cutera Inc is expected to under-perform the Venus Concept. But the stock apears to be less risky and, when comparing its historical volatility, Cutera Inc is 1.7 times less risky than Venus Concept. The stock trades about -0.13 of its potential returns per unit of risk. The Venus Concept is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 57.00 in Venus Concept on September 1, 2024 and sell it today you would lose (25.00) from holding Venus Concept or give up 43.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cutera Inc vs. Venus Concept
Performance |
| Timeline |
| Cutera Inc |
| Venus Concept |
Cutera and Venus Concept Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cutera and Venus Concept
The main advantage of trading using opposite Cutera and Venus Concept positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cutera position performs unexpectedly, Venus Concept 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 Venus Concept will offset losses from the drop in Venus Concept's long position.The idea behind Cutera Inc and Venus Concept 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.| Venus Concept vs. Profound Medical Corp | Venus Concept vs. Si Bone | Venus Concept vs. Nevro Corp | Venus Concept vs. Paragon 28 |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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