Correlation Between ICU Medical and NexGel Warrant

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

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

Diversification Opportunities for ICU Medical and NexGel Warrant

0.07

Correlation Coefficient

ICU Medical  NexGel Warrant

Significant diversification

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

Pair Corralation between ICU Medical and NexGel Warrant

Given the investment horizon of 90 days ICU Medical is expected to under-perform the NexGel Warrant. But the stock apears to be less risky and, when comparing its historical volatility, ICU Medical is 6.03 times less risky than NexGel Warrant. The stock trades about -0.06 of its potential returns per unit of risk. The NexGel Warrant is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  45.00  in NexGel Warrant on September 13, 2024 and sell it today you would earn a total of  1.00  from holding NexGel Warrant or generate 2.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	79.37%
Values	Daily Returns

ICU Medical  vs.  NexGel Warrant

ICU Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ICU Medical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

NexGel Warrant

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NexGel Warrant are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting essential indicators, NexGel Warrant showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ICU Medical and NexGel Warrant

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

The idea behind ICU Medical and NexGel Warrant 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .