Correlation Between Doximity and Pennant

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

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

Diversification Opportunities for Doximity and Pennant

-0.69

Correlation Coefficient

Doximity  Pennant

Excellent diversification

The 3 months correlation between Doximity and Pennant is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Doximity and Pennant Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pennant Group and Doximity 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 Doximity are associated (or correlated) with Pennant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pennant Group has no effect on the direction of Doximity i.e., Doximity and Pennant go up and down completely randomly.

Pair Corralation between Doximity and Pennant

Given the investment horizon of 90 days Doximity is expected to generate 2.03 times more return on investment than Pennant. However, Doximity is 2.03 times more volatile than Pennant Group. It trades about 0.14 of its potential returns per unit of risk. Pennant Group is currently generating about 0.06 per unit of risk. If you would invest  2,747  in Doximity on September 27, 2024 and sell it today you would earn a total of  3,095  from holding Doximity or generate 112.67% return on investment over 90 days.

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

Doximity  vs.  Pennant Group

Doximity

Risk-Adjusted Performance

9 of 100

OK

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

Pennant Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pennant Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Doximity and Pennant

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

The idea behind Doximity and Pennant Group 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.