Correlation Between Nuwellis and NeuroMetrix

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

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

Diversification Opportunities for Nuwellis and NeuroMetrix

-0.11

Correlation Coefficient

Nuwellis  NeuroMetrix

Good diversification

The 3 months correlation between Nuwellis and NeuroMetrix is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Nuwellis and NeuroMetrix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NeuroMetrix and Nuwellis 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 Nuwellis are associated (or correlated) with NeuroMetrix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NeuroMetrix has no effect on the direction of Nuwellis i.e., Nuwellis and NeuroMetrix go up and down completely randomly.

Pair Corralation between Nuwellis and NeuroMetrix

Given the investment horizon of 90 days Nuwellis is expected to under-perform the NeuroMetrix. In addition to that, Nuwellis is 4.13 times more volatile than NeuroMetrix. It trades about -0.04 of its total potential returns per unit of risk. NeuroMetrix is currently generating about 0.02 per unit of volatility. If you would invest  380.00  in NeuroMetrix on September 22, 2024 and sell it today you would earn a total of  10.00  from holding NeuroMetrix or generate 2.63% return on investment over 90 days.

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

Nuwellis  vs.  NeuroMetrix

Nuwellis

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nuwellis are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Nuwellis exhibited solid returns over the last few months and may actually be approaching a breakup point.

NeuroMetrix

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NeuroMetrix has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, NeuroMetrix is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Nuwellis and NeuroMetrix

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

The idea behind Nuwellis and NeuroMetrix 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.