Correlation Between Nuwellis and Tenon Medical

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

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

Diversification Opportunities for Nuwellis and Tenon Medical

-0.4

Correlation Coefficient

Nuwellis  Tenon Medical

Very good diversification

The 3 months correlation between Nuwellis and Tenon is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Nuwellis and Tenon Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tenon Medical 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 Tenon Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tenon Medical has no effect on the direction of Nuwellis i.e., Nuwellis and Tenon Medical go up and down completely randomly.

Pair Corralation between Nuwellis and Tenon Medical

Given the investment horizon of 90 days Nuwellis is expected to under-perform the Tenon Medical. But the stock apears to be less risky and, when comparing its historical volatility, Nuwellis is 8.12 times less risky than Tenon Medical. The stock trades about -0.02 of its potential returns per unit of risk. The Tenon Medical is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  191.00  in Tenon Medical on December 30, 2024 and sell it today you would earn a total of  56.00  from holding Tenon Medical or generate 29.32% return on investment over 90 days.

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

Nuwellis  vs.  Tenon Medical

Nuwellis

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nuwellis has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Tenon Medical

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tenon Medical are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Tenon Medical displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nuwellis and Tenon Medical

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

The idea behind Nuwellis and Tenon 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.