Correlation Between Xtant Medical and Penumbra

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

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

Diversification Opportunities for Xtant Medical and Penumbra

0.3

Correlation Coefficient

Xtant Medical  Penumbra

Weak diversification

The 3 months correlation between Xtant and Penumbra is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Xtant Medical Holdings and Penumbra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Penumbra and Xtant 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 Xtant Medical Holdings 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 Xtant Medical i.e., Xtant Medical and Penumbra go up and down completely randomly.

Pair Corralation between Xtant Medical and Penumbra

Given the investment horizon of 90 days Xtant Medical Holdings is expected to generate 2.28 times more return on investment than Penumbra. However, Xtant Medical is 2.28 times more volatile than Penumbra. It trades about 0.05 of its potential returns per unit of risk. Penumbra is currently generating about 0.09 per unit of risk. If you would invest  46.00  in Xtant Medical Holdings on December 29, 2024 and sell it today you would earn a total of  3.00  from holding Xtant Medical Holdings or generate 6.52% return on investment over 90 days.

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

Xtant Medical Holdings  vs.  Penumbra

Xtant Medical Holdings

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Xtant Medical Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Xtant Medical unveiled solid returns over the last few months and may actually be approaching a breakup point.

Penumbra

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Penumbra are ranked lower than 7 (%) 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 Xtant Medical and Penumbra

The main advantage of trading using opposite Xtant Medical and Penumbra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtant 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 Xtant Medical Holdings 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.