Correlation Between Patterson Companies and Owens Minor

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

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

Diversification Opportunities for Patterson Companies and Owens Minor

-0.23

Correlation Coefficient

Patterson Companies  Owens Minor

Very good diversification

The 3 months correlation between Patterson and Owens is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Patterson Companies and Owens Minor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Owens Minor and Patterson Companies 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 Patterson Companies are associated (or correlated) with Owens Minor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Owens Minor has no effect on the direction of Patterson Companies i.e., Patterson Companies and Owens Minor go up and down completely randomly.

Pair Corralation between Patterson Companies and Owens Minor

Given the investment horizon of 90 days Patterson Companies is expected to generate 0.86 times more return on investment than Owens Minor. However, Patterson Companies is 1.16 times less risky than Owens Minor. It trades about 0.15 of its potential returns per unit of risk. Owens Minor is currently generating about -0.18 per unit of risk. If you would invest  2,149  in Patterson Companies on November 29, 2024 and sell it today you would earn a total of  958.00  from holding Patterson Companies or generate 44.58% return on investment over 90 days.

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

Patterson Companies  vs.  Owens Minor

Patterson Companies

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Patterson Companies are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent fundamental indicators, Patterson Companies displayed solid returns over the last few months and may actually be approaching a breakup point.

Owens Minor

Risk-Adjusted Performance

Very Weak

Over the last 90 days Owens Minor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's primary indicators remain fairly strong which may send shares a bit higher in March 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Patterson Companies and Owens Minor

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

The idea behind Patterson Companies and Owens Minor 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.