Correlation Between ICU Medical and Nexgel

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

By analyzing existing cross correlation between ICU Medical and Nexgel Inc, you can compare the effects of market volatilities on ICU Medical and Nexgel 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 Nexgel. Check out your portfolio center. Please also check ongoing floating volatility patterns of ICU Medical and Nexgel.

Diversification Opportunities for ICU Medical and Nexgel

0.28

Correlation Coefficient

ICU Medical  Nexgel

Modest diversification

The 3 months correlation between ICU and Nexgel is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding ICU Medical and Nexgel Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexgel Inc 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 Nexgel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexgel Inc has no effect on the direction of ICU Medical i.e., ICU Medical and Nexgel go up and down completely randomly.

Pair Corralation between ICU Medical and Nexgel

Given the investment horizon of 90 days ICU Medical is expected to generate 0.51 times more return on investment than Nexgel. However, ICU Medical is 1.97 times less risky than Nexgel. It trades about -0.01 of its potential returns per unit of risk. Nexgel Inc is currently generating about -0.14 per unit of risk. If you would invest  15,446  in ICU Medical on December 27, 2024 and sell it today you would lose (458.00) from holding ICU Medical or give up 2.97% of portfolio value over 90 days.

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

ICU Medical  vs.  Nexgel Inc

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.

Nexgel Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nexgel Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with ICU Medical and Nexgel

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

The idea behind ICU Medical and Nexgel Inc 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.