Correlation Between Koninklijke Philips and Penumbra
Can any of the company-specific risk be diversified away by investing in both Koninklijke Philips and Penumbra 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 Koninklijke Philips and Penumbra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Koninklijke Philips NV and Penumbra, you can compare the effects of market volatilities on Koninklijke Philips and Penumbra 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 Koninklijke Philips with a short position of Penumbra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Koninklijke Philips and Penumbra.
Diversification Opportunities for Koninklijke Philips and Penumbra
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Koninklijke and Penumbra is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Koninklijke Philips NV and Penumbra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Penumbra and Koninklijke Philips 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 Koninklijke Philips NV are associated (or correlated) with Penumbra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Penumbra has no effect on the direction of Koninklijke Philips i.e., Koninklijke Philips and Penumbra go up and down completely randomly.
Pair Corralation between Koninklijke Philips and Penumbra
Considering the 90-day investment horizon Koninklijke Philips is expected to generate 6.92 times less return on investment than Penumbra. But when comparing it to its historical volatility, Koninklijke Philips NV is 1.27 times less risky than Penumbra. It trades about 0.07 of its potential returns per unit of risk. Penumbra is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 20,874 in Penumbra on August 28, 2024 and sell it today you would earn a total of 3,594 from holding Penumbra or generate 17.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Koninklijke Philips NV vs. Penumbra
Performance |
| Timeline |
| Koninklijke Philips |
| Penumbra |
Koninklijke Philips and Penumbra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Koninklijke Philips and Penumbra
The main advantage of trading using opposite Koninklijke Philips and Penumbra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Koninklijke Philips position performs unexpectedly, Penumbra 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 Penumbra will offset losses from the drop in Penumbra's long position.| Koninklijke Philips vs. Heartbeam | Koninklijke Philips vs. EUDA Health Holdings | Koninklijke Philips vs. Nutex Health | Koninklijke Philips vs. Healthcare Triangle |
| Penumbra vs. Insulet | Penumbra vs. TransMedics Group | Penumbra vs. Masimo | Penumbra vs. Inspire Medical Systems |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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