Correlation Between Owens Minor and Patterson Companies

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

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

Diversification Opportunities for Owens Minor and Patterson Companies

0.49

Correlation Coefficient

Owens Minor  Patterson Companies

Very weak diversification

The 3 months correlation between Owens and Patterson is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Owens Minor and Patterson Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patterson Companies and Owens Minor 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 Owens Minor are associated (or correlated) with Patterson Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patterson Companies has no effect on the direction of Owens Minor i.e., Owens Minor and Patterson Companies go up and down completely randomly.

Pair Corralation between Owens Minor and Patterson Companies

Considering the 90-day investment horizon Owens Minor is expected to under-perform the Patterson Companies. In addition to that, Owens Minor is 2.01 times more volatile than Patterson Companies. It trades about -0.04 of its total potential returns per unit of risk. Patterson Companies is currently generating about -0.02 per unit of volatility. If you would invest  2,221  in Patterson Companies on August 30, 2024 and sell it today you would lose (77.00) from holding Patterson Companies or give up 3.47% of portfolio value over 90 days.

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

Owens Minor  vs.  Patterson Companies

Owens Minor

Risk-Adjusted Performance

0 of 100

Very Weak

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

Patterson Companies

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Owens Minor and Patterson Companies

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

The idea behind Owens Minor and Patterson Companies 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..