Correlation Between Sientra and Neuropace

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

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

Diversification Opportunities for Sientra and Neuropace

0.88

Correlation Coefficient

Sientra  Neuropace

Very poor diversification

The 3 months correlation between Sientra and Neuropace is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Sientra and Neuropace in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neuropace and Sientra 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 Sientra are associated (or correlated) with Neuropace. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neuropace has no effect on the direction of Sientra i.e., Sientra and Neuropace go up and down completely randomly.

Pair Corralation between Sientra and Neuropace

If you would invest  672.00  in Neuropace on September 26, 2024 and sell it today you would earn a total of  442.00  from holding Neuropace or generate 65.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	1.59%
Values	Daily Returns

Sientra  vs.  Neuropace

Sientra

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sientra has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Sientra is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Neuropace

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Neuropace are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent fundamental indicators, Neuropace exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sientra and Neuropace

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

The idea behind Sientra and Neuropace 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.