Correlation Between Cutera and AtriCure

Can any of the company-specific risk be diversified away by investing in both Cutera and AtriCure 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 Cutera and AtriCure into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cutera Inc and AtriCure, you can compare the effects of market volatilities on Cutera and AtriCure 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 Cutera with a short position of AtriCure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cutera and AtriCure.

Diversification Opportunities for Cutera and AtriCure

-0.87

Correlation Coefficient

Cutera  AtriCure

Pay attention - limited upside

The 3 months correlation between Cutera and AtriCure is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Cutera Inc and AtriCure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AtriCure and Cutera 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 Cutera Inc are associated (or correlated) with AtriCure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AtriCure has no effect on the direction of Cutera i.e., Cutera and AtriCure go up and down completely randomly.

Pair Corralation between Cutera and AtriCure

Given the investment horizon of 90 days Cutera Inc is expected to under-perform the AtriCure. In addition to that, Cutera is 2.26 times more volatile than AtriCure. It trades about -0.04 of its total potential returns per unit of risk. AtriCure is currently generating about 0.19 per unit of volatility. If you would invest  2,594  in AtriCure on August 31, 2024 and sell it today you would earn a total of  1,023  from holding AtriCure or generate 39.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Cutera Inc  vs.  AtriCure

Cutera Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cutera Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in December 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

AtriCure

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AtriCure are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, AtriCure exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cutera and AtriCure

The main advantage of trading using opposite Cutera and AtriCure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cutera position performs unexpectedly, AtriCure 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 AtriCure will offset losses from the drop in AtriCure's long position.

The idea behind Cutera Inc and AtriCure pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.