Correlation Between Establishment Labs and Paragon 28
Can any of the company-specific risk be diversified away by investing in both Establishment Labs and Paragon 28 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 Establishment Labs and Paragon 28 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Establishment Labs Holdings and Paragon 28, you can compare the effects of market volatilities on Establishment Labs and Paragon 28 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 Establishment Labs with a short position of Paragon 28. Check out your portfolio center. Please also check ongoing floating volatility patterns of Establishment Labs and Paragon 28.
Diversification Opportunities for Establishment Labs and Paragon 28
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Establishment and Paragon is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Establishment Labs Holdings and Paragon 28 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paragon 28 and Establishment Labs 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 Establishment Labs Holdings are associated (or correlated) with Paragon 28. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paragon 28 has no effect on the direction of Establishment Labs i.e., Establishment Labs and Paragon 28 go up and down completely randomly.
Pair Corralation between Establishment Labs and Paragon 28
Given the investment horizon of 90 days Establishment Labs Holdings is expected to under-perform the Paragon 28. In addition to that, Establishment Labs is 2.28 times more volatile than Paragon 28. It trades about -0.26 of its total potential returns per unit of risk. Paragon 28 is currently generating about 0.35 per unit of volatility. If you would invest 1,076 in Paragon 28 on November 7, 2024 and sell it today you would earn a total of 224.00 from holding Paragon 28 or generate 20.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Establishment Labs Holdings vs. Paragon 28
Performance |
| Timeline |
| Establishment Labs |
| Paragon 28 |
Establishment Labs and Paragon 28 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Establishment Labs and Paragon 28
The main advantage of trading using opposite Establishment Labs and Paragon 28 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Establishment Labs position performs unexpectedly, Paragon 28 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 Paragon 28 will offset losses from the drop in Paragon 28's long position.| Establishment Labs vs. Orthopediatrics Corp | Establishment Labs vs. Integer Holdings Corp | Establishment Labs vs. Treace Medical Concepts | Establishment Labs vs. CONMED |
| Paragon 28 vs. Pulmonx Corp | Paragon 28 vs. Iradimed Co | Paragon 28 vs. Orthofix Medical | Paragon 28 vs. Neuropace |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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