Correlation Between LivaNova PLC and Clearpoint Neuro

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

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

Diversification Opportunities for LivaNova PLC and Clearpoint Neuro

-0.26

Correlation Coefficient

LivaNova PLC  Clearpoint Neuro

Very good diversification

The 3 months correlation between LivaNova and Clearpoint is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding LivaNova PLC and Clearpoint Neuro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearpoint Neuro and LivaNova PLC 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 LivaNova PLC are associated (or correlated) with Clearpoint Neuro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearpoint Neuro has no effect on the direction of LivaNova PLC i.e., LivaNova PLC and Clearpoint Neuro go up and down completely randomly.

Pair Corralation between LivaNova PLC and Clearpoint Neuro

Given the investment horizon of 90 days LivaNova PLC is expected to generate 4.33 times less return on investment than Clearpoint Neuro. But when comparing it to its historical volatility, LivaNova PLC is 2.62 times less risky than Clearpoint Neuro. It trades about 0.06 of its potential returns per unit of risk. Clearpoint Neuro is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,240  in Clearpoint Neuro on September 15, 2024 and sell it today you would earn a total of  293.00  from holding Clearpoint Neuro or generate 23.63% return on investment over 90 days.

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

LivaNova PLC  vs.  Clearpoint Neuro

LivaNova PLC

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in LivaNova PLC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, LivaNova PLC is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Clearpoint Neuro

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Clearpoint Neuro are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Clearpoint Neuro unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with LivaNova PLC and Clearpoint Neuro

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

The idea behind LivaNova PLC and Clearpoint Neuro 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.