Correlation Between Neuropace and ICU Medical

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

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

Diversification Opportunities for Neuropace and ICU Medical

-0.87

Correlation Coefficient

Neuropace  ICU Medical

Pay attention - limited upside

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

Pair Corralation between Neuropace and ICU Medical

Given the investment horizon of 90 days Neuropace is expected to generate 3.03 times more return on investment than ICU Medical. However, Neuropace is 3.03 times more volatile than ICU Medical. It trades about 0.16 of its potential returns per unit of risk. ICU Medical is currently generating about -0.06 per unit of risk. If you would invest  697.00  in Neuropace on September 14, 2024 and sell it today you would earn a total of  394.00  from holding Neuropace or generate 56.53% return on investment over 90 days.

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

Neuropace  vs.  ICU Medical

Neuropace

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Neuropace are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Neuropace exhibited solid returns over the last few months and may actually be approaching a breakup point.

ICU Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ICU Medical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Neuropace and ICU Medical

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

The idea behind Neuropace and ICU Medical 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.