Correlation Between Penumbra and Thermo Fisher

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

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

Diversification Opportunities for Penumbra and Thermo Fisher

-0.07

Correlation Coefficient

Penumbra  Thermo Fisher

Good diversification

The 3 months correlation between Penumbra and Thermo is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Penumbra and Thermo Fisher Scientific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thermo Fisher Scientific and Penumbra 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 Penumbra are associated (or correlated) with Thermo Fisher. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thermo Fisher Scientific has no effect on the direction of Penumbra i.e., Penumbra and Thermo Fisher go up and down completely randomly.

Pair Corralation between Penumbra and Thermo Fisher

Considering the 90-day investment horizon Penumbra is expected to under-perform the Thermo Fisher. In addition to that, Penumbra is 1.54 times more volatile than Thermo Fisher Scientific. It trades about -0.02 of its total potential returns per unit of risk. Thermo Fisher Scientific is currently generating about 0.27 per unit of volatility. If you would invest  54,838  in Thermo Fisher Scientific on February 22, 2024 and sell it today you would earn a total of  4,174  from holding Thermo Fisher Scientific or generate 7.61% return on investment over 90 days.

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

Penumbra  vs.  Thermo Fisher Scientific

Penumbra

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Penumbra has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in June 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Thermo Fisher Scientific

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Thermo Fisher Scientific are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, Thermo Fisher is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Penumbra and Thermo Fisher

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

The idea behind Penumbra and Thermo Fisher Scientific 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.