Correlation Between LeMaitre Vascular and Pro Dex

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

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

Diversification Opportunities for LeMaitre Vascular and Pro Dex

0.73

Correlation Coefficient

LeMaitre Vascular  Pro Dex

Poor diversification

The 3 months correlation between LeMaitre and Pro is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding LeMaitre Vascular and Pro Dex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pro Dex and LeMaitre Vascular 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 LeMaitre Vascular are associated (or correlated) with Pro Dex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pro Dex has no effect on the direction of LeMaitre Vascular i.e., LeMaitre Vascular and Pro Dex go up and down completely randomly.

Pair Corralation between LeMaitre Vascular and Pro Dex

Given the investment horizon of 90 days LeMaitre Vascular is expected to generate 1.17 times more return on investment than Pro Dex. However, LeMaitre Vascular is 1.17 times more volatile than Pro Dex. It trades about 0.13 of its potential returns per unit of risk. Pro Dex is currently generating about 0.12 per unit of risk. If you would invest  6,736  in LeMaitre Vascular on March 14, 2024 and sell it today you would earn a total of  1,161  from holding LeMaitre Vascular or generate 17.24% return on investment over 90 days.

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

LeMaitre Vascular  vs.  Pro Dex

LeMaitre Vascular

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in LeMaitre Vascular are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, LeMaitre Vascular unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pro Dex

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pro Dex are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Pro Dex showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with LeMaitre Vascular and Pro Dex

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

The idea behind LeMaitre Vascular and Pro Dex 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.