Correlation Between Neuropace and Axogen

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

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

Diversification Opportunities for Neuropace and Axogen

-0.3

Correlation Coefficient

Neuropace  Axogen

Very good diversification

The 3 months correlation between Neuropace and Axogen is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Neuropace and Axogen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axogen Inc and Neuropace 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 Neuropace are associated (or correlated) with Axogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axogen Inc has no effect on the direction of Neuropace i.e., Neuropace and Axogen go up and down completely randomly.

Pair Corralation between Neuropace and Axogen

Given the investment horizon of 90 days Neuropace is expected to generate 1.54 times more return on investment than Axogen. However, Neuropace is 1.54 times more volatile than Axogen Inc. It trades about 0.13 of its potential returns per unit of risk. Axogen Inc is currently generating about 0.04 per unit of risk. If you would invest  739.00  in Neuropace on September 2, 2024 and sell it today you would earn a total of  321.00  from holding Neuropace or generate 43.44% return on investment over 90 days.

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

Neuropace  vs.  Axogen Inc

Neuropace

Risk-Adjusted Performance

10 of 100

OK

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

Axogen Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Axogen Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting technical and fundamental indicators, Axogen may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Neuropace and Axogen

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

The idea behind Neuropace and Axogen Inc 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.