Correlation Between Paragon 28 and Glaukos Corp
Can any of the company-specific risk be diversified away by investing in both Paragon 28 and Glaukos Corp 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 Paragon 28 and Glaukos Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Paragon 28 and Glaukos Corp, you can compare the effects of market volatilities on Paragon 28 and Glaukos Corp 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 Paragon 28 with a short position of Glaukos Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Paragon 28 and Glaukos Corp.
Diversification Opportunities for Paragon 28 and Glaukos Corp
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Paragon and Glaukos is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Paragon 28 and Glaukos Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glaukos Corp and Paragon 28 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 Paragon 28 are associated (or correlated) with Glaukos Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Glaukos Corp has no effect on the direction of Paragon 28 i.e., Paragon 28 and Glaukos Corp go up and down completely randomly.
Pair Corralation between Paragon 28 and Glaukos Corp
Considering the 90-day investment horizon Paragon 28 is expected to under-perform the Glaukos Corp. In addition to that, Paragon 28 is 2.5 times more volatile than Glaukos Corp. It trades about -0.1 of its total potential returns per unit of risk. Glaukos Corp is currently generating about 0.2 per unit of volatility. If you would invest 8,856 in Glaukos Corp on March 3, 2024 and sell it today you would earn a total of 2,416 from holding Glaukos Corp or generate 27.28% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Paragon 28 vs. Glaukos Corp
Performance |
Timeline |
Paragon 28 |
Glaukos Corp |
Paragon 28 and Glaukos Corp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Paragon 28 and Glaukos Corp
The main advantage of trading using opposite Paragon 28 and Glaukos Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Paragon 28 position performs unexpectedly, Glaukos Corp 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 Glaukos Corp will offset losses from the drop in Glaukos Corp's long position.The idea behind Paragon 28 and Glaukos Corp 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.Check out your portfolio center.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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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