Correlation Between Paragon 28 and Medtronic PLC
Can any of the company-specific risk be diversified away by investing in both Paragon 28 and Medtronic PLC 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 Paragon 28 and Medtronic PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Paragon 28 and Medtronic PLC, you can compare the effects of market volatilities on Paragon 28 and Medtronic PLC 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 Paragon 28 with a short position of Medtronic PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Paragon 28 and Medtronic PLC.
Diversification Opportunities for Paragon 28 and Medtronic PLC
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Paragon and Medtronic is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Paragon 28 and Medtronic PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medtronic PLC and Paragon 28 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 Paragon 28 are associated (or correlated) with Medtronic PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medtronic PLC has no effect on the direction of Paragon 28 i.e., Paragon 28 and Medtronic PLC go up and down completely randomly.
Pair Corralation between Paragon 28 and Medtronic PLC
Considering the 90-day investment horizon Paragon 28 is expected to generate 7.57 times more return on investment than Medtronic PLC. However, Paragon 28 is 7.57 times more volatile than Medtronic PLC. It trades about 0.36 of its potential returns per unit of risk. Medtronic PLC is currently generating about -0.15 per unit of risk. If you would invest 562.00 in Paragon 28 on September 2, 2024 and sell it today you would earn a total of 469.00 from holding Paragon 28 or generate 83.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Paragon 28 vs. Medtronic PLC
Performance |
| Timeline |
| Paragon 28 |
| Medtronic PLC |
Paragon 28 and Medtronic PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Paragon 28 and Medtronic PLC
The main advantage of trading using opposite Paragon 28 and Medtronic PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Paragon 28 position performs unexpectedly, Medtronic PLC 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 Medtronic PLC will offset losses from the drop in Medtronic PLC's long position.| Paragon 28 vs. Profound Medical Corp | Paragon 28 vs. Si Bone | Paragon 28 vs. Nevro Corp | Paragon 28 vs. Orthopediatrics Corp |
| Medtronic PLC vs. Edwards Lifesciences Corp | Medtronic PLC vs. Abbott Laboratories | Medtronic PLC vs. Boston Scientific Corp | Medtronic PLC vs. Zimmer Biomet Holdings |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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