Correlation Between Shockwave Medical and Penumbra

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

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

Diversification Opportunities for Shockwave Medical and Penumbra

0.0

Correlation Coefficient

Shockwave Medical  Penumbra

Pay attention - limited upside

The 3 months correlation between Shockwave and Penumbra is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Shockwave Medical and Penumbra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Penumbra and Shockwave Medical 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 Shockwave Medical are associated (or correlated) with Penumbra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Penumbra has no effect on the direction of Shockwave Medical i.e., Shockwave Medical and Penumbra go up and down completely randomly.

Pair Corralation between Shockwave Medical and Penumbra

If you would invest  23,818  in Penumbra on December 30, 2024 and sell it today you would earn a total of  2,938  from holding Penumbra or generate 12.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Shockwave Medical  vs.  Penumbra

Shockwave Medical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shockwave Medical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Shockwave Medical is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Penumbra

Risk-Adjusted Performance

Modest

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

Pair Trading with Shockwave Medical and Penumbra

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

The idea behind Shockwave Medical and Penumbra 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.