Correlation Between Nuwellis and Penumbra

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

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

Diversification Opportunities for Nuwellis and Penumbra

-0.25

Correlation Coefficient

Nuwellis  Penumbra

Very good diversification

The 3 months correlation between Nuwellis and Penumbra is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Nuwellis and Penumbra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Penumbra and Nuwellis 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 Nuwellis are associated (or correlated) with Penumbra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Penumbra has no effect on the direction of Nuwellis i.e., Nuwellis and Penumbra go up and down completely randomly.

Pair Corralation between Nuwellis and Penumbra

Given the investment horizon of 90 days Nuwellis is expected to generate 3.71 times more return on investment than Penumbra. However, Nuwellis is 3.71 times more volatile than Penumbra. It trades about 0.12 of its potential returns per unit of risk. Penumbra is currently generating about 0.01 per unit of risk. If you would invest  117.00  in Nuwellis on November 19, 2024 and sell it today you would earn a total of  12.00  from holding Nuwellis or generate 10.26% return on investment over 90 days.

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

Nuwellis  vs.  Penumbra

Nuwellis

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nuwellis are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Nuwellis is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Penumbra

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Penumbra are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, Penumbra displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nuwellis and Penumbra

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

The idea behind Nuwellis and Penumbra 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..