Correlation Between Penumbra and Avanos Medical
Can any of the company-specific risk be diversified away by investing in both Penumbra and Avanos Medical 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 Penumbra and Avanos Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Penumbra and Avanos Medical, you can compare the effects of market volatilities on Penumbra and Avanos Medical 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 Penumbra with a short position of Avanos Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penumbra and Avanos Medical.
Diversification Opportunities for Penumbra and Avanos Medical
-0.89 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Penumbra and Avanos is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Penumbra and Avanos Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avanos Medical and Penumbra 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 Penumbra are associated (or correlated) with Avanos Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avanos Medical has no effect on the direction of Penumbra i.e., Penumbra and Avanos Medical go up and down completely randomly.
Pair Corralation between Penumbra and Avanos Medical
Considering the 90-day investment horizon Penumbra is expected to under-perform the Avanos Medical. In addition to that, Penumbra is 1.09 times more volatile than Avanos Medical. It trades about -0.02 of its total potential returns per unit of risk. Avanos Medical is currently generating about -0.02 per unit of volatility. If you would invest 2,537 in Avanos Medical on September 4, 2024 and sell it today you would lose (577.00) from holding Avanos Medical or give up 22.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Penumbra vs. Avanos Medical
Performance |
| Timeline |
| Penumbra |
| Avanos Medical |
Penumbra and Avanos Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Penumbra and Avanos Medical
The main advantage of trading using opposite Penumbra and Avanos Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Penumbra position performs unexpectedly, Avanos Medical 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 Avanos Medical will offset losses from the drop in Avanos Medical's long position.| Penumbra vs. Insulet | Penumbra vs. TransMedics Group | Penumbra vs. Masimo | Penumbra vs. Inspire Medical Systems |
| Avanos Medical vs. Baxter International | Avanos Medical vs. West Pharmaceutical Services | Avanos Medical vs. ResMed Inc | Avanos Medical vs. The Cooper Companies, |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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