Correlation Between Treace Medical and Paragon 28
Can any of the company-specific risk be diversified away by investing in both Treace Medical and Paragon 28 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 Treace Medical and Paragon 28 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Treace Medical Concepts and Paragon 28, you can compare the effects of market volatilities on Treace Medical and Paragon 28 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 Treace Medical with a short position of Paragon 28. Check out your portfolio center. Please also check ongoing floating volatility patterns of Treace Medical and Paragon 28.
Diversification Opportunities for Treace Medical and Paragon 28
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Treace and Paragon is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Treace Medical Concepts and Paragon 28 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paragon 28 and Treace Medical 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 Treace Medical Concepts are associated (or correlated) with Paragon 28. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paragon 28 has no effect on the direction of Treace Medical i.e., Treace Medical and Paragon 28 go up and down completely randomly.
Pair Corralation between Treace Medical and Paragon 28
Given the investment horizon of 90 days Treace Medical Concepts is expected to generate 1.3 times more return on investment than Paragon 28. However, Treace Medical is 1.3 times more volatile than Paragon 28. It trades about 0.0 of its potential returns per unit of risk. Paragon 28 is currently generating about 0.01 per unit of risk. If you would invest 2,189 in Treace Medical Concepts on November 9, 2024 and sell it today you would lose (1,161) from holding Treace Medical Concepts or give up 53.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Treace Medical Concepts vs. Paragon 28
Performance |
| Timeline |
| Treace Medical Concepts |
| Paragon 28 |
Treace Medical and Paragon 28 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Treace Medical and Paragon 28
The main advantage of trading using opposite Treace Medical and Paragon 28 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Treace Medical position performs unexpectedly, Paragon 28 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 Paragon 28 will offset losses from the drop in Paragon 28's long position.| Treace Medical vs. Rxsight | Treace Medical vs. Axogen Inc | Treace Medical vs. Pulmonx Corp | Treace Medical vs. Orthofix Medical |
| Paragon 28 vs. Pulmonx Corp | Paragon 28 vs. Iradimed Co | Paragon 28 vs. Orthofix Medical | Paragon 28 vs. Neuropace |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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