Correlation Between Nevro Corp and SurModics

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

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

Diversification Opportunities for Nevro Corp and SurModics

0.09

Correlation Coefficient

Nevro Corp  SurModics

Significant diversification

The 3 months correlation between Nevro and SurModics is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Nevro Corp and SurModics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SurModics 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 SurModics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SurModics has no effect on the direction of Nevro Corp i.e., Nevro Corp and SurModics go up and down completely randomly.

Pair Corralation between Nevro Corp and SurModics

Given the investment horizon of 90 days Nevro Corp is expected to under-perform the SurModics. In addition to that, Nevro Corp is 7.21 times more volatile than SurModics. It trades about -0.04 of its total potential returns per unit of risk. SurModics is currently generating about 0.03 per unit of volatility. If you would invest  3,922  in SurModics on September 3, 2024 and sell it today you would earn a total of  42.00  from holding SurModics or generate 1.07% 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.  SurModics

Nevro Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nevro Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

SurModics

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SurModics are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental indicators, SurModics is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Nevro Corp and SurModics

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

The idea behind Nevro Corp and SurModics 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.