Correlation Between Doximity and Patterson Companies

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

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

Diversification Opportunities for Doximity and Patterson Companies

0.51

Correlation Coefficient

Doximity  Patterson Companies

Very weak diversification

The 3 months correlation between Doximity and Patterson is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Doximity and Patterson Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patterson Companies and Doximity 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 Doximity are associated (or correlated) with Patterson Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patterson Companies has no effect on the direction of Doximity i.e., Doximity and Patterson Companies go up and down completely randomly.

Pair Corralation between Doximity and Patterson Companies

Given the investment horizon of 90 days Doximity is expected to generate 60.97 times more return on investment than Patterson Companies. However, Doximity is 60.97 times more volatile than Patterson Companies. It trades about 0.05 of its potential returns per unit of risk. Patterson Companies is currently generating about 0.21 per unit of risk. If you would invest  5,346  in Doximity on December 30, 2024 and sell it today you would earn a total of  505.00  from holding Doximity or generate 9.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Doximity  vs.  Patterson Companies

Doximity

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Doximity are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady fundamental indicators, Doximity unveiled solid returns over the last few months and may actually be approaching a breakup point.

Patterson Companies

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Patterson Companies are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Patterson Companies is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Doximity and Patterson Companies

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

The idea behind Doximity and Patterson Companies 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.

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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.