Correlation Between ICU Medical and Paragon 28

Can any of the company-specific risk be diversified away by investing in both ICU 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 ICU 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 ICU Medical and Paragon 28, you can compare the effects of market volatilities on ICU 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 ICU Medical with a short position of Paragon 28. Check out your portfolio center. Please also check ongoing floating volatility patterns of ICU Medical and Paragon 28.

Diversification Opportunities for ICU Medical and Paragon 28

-0.36

Correlation Coefficient

ICU Medical  Paragon 28

Very good diversification

The 3 months correlation between ICU and Paragon is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding ICU Medical and Paragon 28 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paragon 28 and ICU 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 ICU Medical 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 ICU Medical i.e., ICU Medical and Paragon 28 go up and down completely randomly.

Pair Corralation between ICU Medical and Paragon 28

Given the investment horizon of 90 days ICU Medical is expected to under-perform the Paragon 28. In addition to that, ICU Medical is 1.36 times more volatile than Paragon 28. It trades about -0.03 of its total potential returns per unit of risk. Paragon 28 is currently generating about 0.24 per unit of volatility. If you would invest  1,025  in Paragon 28 on December 28, 2024 and sell it today you would earn a total of  276.00  from holding Paragon 28 or generate 26.93% return on investment over 90 days.

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

ICU Medical  vs.  Paragon 28

ICU Medical

Risk-Adjusted Performance

Very Weak

Over the last 90 days ICU Medical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, ICU Medical is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Paragon 28

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Paragon 28 are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, Paragon 28 sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ICU Medical and Paragon 28

The main advantage of trading using opposite ICU Medical and Paragon 28 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ICU 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.

The idea behind ICU Medical and Paragon 28 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.