Correlation Between TransMedics and Penumbra
Can any of the company-specific risk be diversified away by investing in both TransMedics 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 TransMedics and Penumbra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TransMedics Group and Penumbra, you can compare the effects of market volatilities on TransMedics 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 TransMedics with a short position of Penumbra. Check out your portfolio center. Please also check ongoing floating volatility patterns of TransMedics and Penumbra.
Diversification Opportunities for TransMedics and Penumbra
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between TransMedics and Penumbra is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding TransMedics Group and Penumbra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Penumbra and TransMedics 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 TransMedics Group 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 TransMedics i.e., TransMedics and Penumbra go up and down completely randomly.
Pair Corralation between TransMedics and Penumbra
Given the investment horizon of 90 days TransMedics Group is expected to under-perform the Penumbra. In addition to that, TransMedics is 3.46 times more volatile than Penumbra. It trades about -0.2 of its total potential returns per unit of risk. Penumbra is currently generating about 0.36 per unit of volatility. If you would invest 20,371 in Penumbra on August 24, 2024 and sell it today you would earn a total of 3,678 from holding Penumbra or generate 18.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TransMedics Group vs. Penumbra
Performance |
| Timeline |
| TransMedics Group |
| Penumbra |
TransMedics and Penumbra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TransMedics and Penumbra
The main advantage of trading using opposite TransMedics and Penumbra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TransMedics 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.| TransMedics vs. Inspire Medical Systems | TransMedics vs. Inari Medical | TransMedics vs. InMode | TransMedics vs. Insulet |
| 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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