Correlation Between Neuropace and TriSalus Life

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

By analyzing existing cross correlation between Neuropace and TriSalus Life Sciences, you can compare the effects of market volatilities on Neuropace and TriSalus Life 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 TriSalus Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Neuropace and TriSalus Life.

Diversification Opportunities for Neuropace and TriSalus Life

-0.75

Correlation Coefficient

Neuropace  TriSalus Life

Pay attention - limited upside

The 3 months correlation between Neuropace and TriSalus is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Neuropace and TriSalus Life Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TriSalus Life Sciences 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 TriSalus Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TriSalus Life Sciences has no effect on the direction of Neuropace i.e., Neuropace and TriSalus Life go up and down completely randomly.

Pair Corralation between Neuropace and TriSalus Life

Given the investment horizon of 90 days Neuropace is expected to generate 2.3 times less return on investment than TriSalus Life. But when comparing it to its historical volatility, Neuropace is 2.27 times less risky than TriSalus Life. It trades about 0.06 of its potential returns per unit of risk. TriSalus Life Sciences is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,024  in TriSalus Life Sciences on October 22, 2024 and sell it today you would lose (903.00) from holding TriSalus Life Sciences or give up 88.18% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.36%
Values	Daily Returns

Neuropace  vs.  TriSalus Life Sciences

Neuropace

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Neuropace are ranked lower than 18 (%) 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.

TriSalus Life Sciences

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in TriSalus Life Sciences are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady forward indicators, TriSalus Life may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Neuropace and TriSalus Life

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

The idea behind Neuropace and TriSalus Life Sciences 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.