Correlation Between Paragon 28 and USA Equities
Can any of the company-specific risk be diversified away by investing in both Paragon 28 and USA Equities 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 USA Equities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Paragon 28 and USA Equities Corp, you can compare the effects of market volatilities on Paragon 28 and USA Equities 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 USA Equities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Paragon 28 and USA Equities.
Diversification Opportunities for Paragon 28 and USA Equities
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Paragon and USA is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Paragon 28 and USA Equities Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on USA Equities Corp 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 USA Equities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of USA Equities Corp has no effect on the direction of Paragon 28 i.e., Paragon 28 and USA Equities go up and down completely randomly.
Pair Corralation between Paragon 28 and USA Equities
Considering the 90-day investment horizon Paragon 28 is expected to under-perform the USA Equities. But the stock apears to be less risky and, when comparing its historical volatility, Paragon 28 is 5.17 times less risky than USA Equities. The stock trades about -0.01 of its potential returns per unit of risk. The USA Equities Corp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 15.00 in USA Equities Corp on August 26, 2024 and sell it today you would lose (6.50) from holding USA Equities Corp or give up 43.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Paragon 28 vs. USA Equities Corp
Performance |
| Timeline |
| Paragon 28 |
| USA Equities Corp |
Paragon 28 and USA Equities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Paragon 28 and USA Equities
The main advantage of trading using opposite Paragon 28 and USA Equities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Paragon 28 position performs unexpectedly, USA Equities 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 USA Equities will offset losses from the drop in USA Equities' long position.| Paragon 28 vs. Pulmonx Corp | Paragon 28 vs. Iradimed Co | Paragon 28 vs. Orthofix Medical | Paragon 28 vs. Neuropace |
| USA Equities vs. Brainsway | USA Equities vs. Venus Concept | USA Equities vs. Tactile Systems Technology | USA Equities vs. Icecure Medical |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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