Correlation Between Nevro Corp and Integra LifeSciences

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

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

Diversification Opportunities for Nevro Corp and Integra LifeSciences

0.18

Correlation Coefficient

Nevro Corp  Integra LifeSciences

Average diversification

The 3 months correlation between Nevro and Integra is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Nevro Corp and Integra LifeSciences Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Integra LifeSciences and Nevro Corp 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 Nevro Corp are associated (or correlated) with Integra LifeSciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Integra LifeSciences has no effect on the direction of Nevro Corp i.e., Nevro Corp and Integra LifeSciences go up and down completely randomly.

Pair Corralation between Nevro Corp and Integra LifeSciences

Given the investment horizon of 90 days Nevro Corp is expected to generate 1.41 times more return on investment than Integra LifeSciences. However, Nevro Corp is 1.41 times more volatile than Integra LifeSciences Holdings. It trades about 0.19 of its potential returns per unit of risk. Integra LifeSciences Holdings is currently generating about 0.0 per unit of risk. If you would invest  372.00  in Nevro Corp on December 28, 2024 and sell it today you would earn a total of  212.00  from holding Nevro Corp or generate 56.99% return on investment over 90 days.

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

Nevro Corp  vs.  Integra LifeSciences Holdings

Nevro Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nevro Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Nevro Corp displayed solid returns over the last few months and may actually be approaching a breakup point.

Integra LifeSciences

Risk-Adjusted Performance

Very Weak

Over the last 90 days Integra LifeSciences Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Integra LifeSciences is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Nevro Corp and Integra LifeSciences

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

The idea behind Nevro Corp and Integra LifeSciences Holdings 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.