Correlation Between Penumbra and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Penumbra and Dow Jones 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 Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Penumbra and Dow Jones Industrial, you can compare the effects of market volatilities on Penumbra and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penumbra and Dow Jones.
Diversification Opportunities for Penumbra and Dow Jones
Poor diversification
The 3 months correlation between Penumbra and Dow is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Penumbra and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Penumbra i.e., Penumbra and Dow Jones go up and down completely randomly.
Pair Corralation between Penumbra and Dow Jones
Considering the 90-day investment horizon Penumbra is expected to generate 2.97 times more return on investment than Dow Jones. However, Penumbra is 2.97 times more volatile than Dow Jones Industrial. It trades about 0.15 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.18 per unit of risk. If you would invest 20,046 in Penumbra on August 28, 2024 and sell it today you would earn a total of 4,422 from holding Penumbra or generate 22.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Penumbra vs. Dow Jones Industrial
Performance |
| Timeline |
Penumbra and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Penumbra
Pair trading matchups for Penumbra
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Penumbra and Dow Jones
The main advantage of trading using opposite Penumbra and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Penumbra position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Penumbra vs. Insulet | Penumbra vs. TransMedics Group | Penumbra vs. Masimo | Penumbra vs. Inspire Medical Systems |
| Dow Jones vs. Meiwu Technology Co | Dow Jones vs. 17 Education Technology | Dow Jones vs. 51Talk Online Education | Dow Jones vs. Afya |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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