Correlation Between NYSE Composite and TransMedics
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and TransMedics 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 NYSE Composite and TransMedics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and TransMedics Group, you can compare the effects of market volatilities on NYSE Composite and TransMedics 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 NYSE Composite with a short position of TransMedics. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and TransMedics.
Diversification Opportunities for NYSE Composite and TransMedics
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NYSE and TransMedics is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and TransMedics Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TransMedics Group and NYSE Composite 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 NYSE Composite are associated (or correlated) with TransMedics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TransMedics Group has no effect on the direction of NYSE Composite i.e., NYSE Composite and TransMedics go up and down completely randomly.
Pair Corralation between NYSE Composite and TransMedics
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.46 times less return on investment than TransMedics. But when comparing it to its historical volatility, NYSE Composite is 6.2 times less risky than TransMedics. It trades about 0.14 of its potential returns per unit of risk. TransMedics Group is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 7,030 in TransMedics Group on August 24, 2024 and sell it today you would earn a total of 904.00 from holding TransMedics Group or generate 12.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. TransMedics Group
Performance |
| Timeline |
NYSE Composite and TransMedics Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
TransMedics Group
Pair trading matchups for TransMedics
Pair Trading with NYSE Composite and TransMedics
The main advantage of trading using opposite NYSE Composite and TransMedics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, TransMedics 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 TransMedics will offset losses from the drop in TransMedics' long position.| NYSE Composite vs. Awilco Drilling PLC | NYSE Composite vs. AKITA Drilling | NYSE Composite vs. SunOpta | NYSE Composite vs. Delek Drilling |
| TransMedics vs. Inspire Medical Systems | TransMedics vs. Inari Medical | TransMedics vs. InMode | TransMedics vs. Insulet |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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