Correlation Between Penumbra and Electrocore LLC

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

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

Diversification Opportunities for Penumbra and Electrocore LLC

0.82

Correlation Coefficient

Penumbra  Electrocore LLC

Very poor diversification

The 3 months correlation between Penumbra and Electrocore is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Penumbra and Electrocore LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electrocore LLC and Penumbra 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 Penumbra are associated (or correlated) with Electrocore LLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electrocore LLC has no effect on the direction of Penumbra i.e., Penumbra and Electrocore LLC go up and down completely randomly.

Pair Corralation between Penumbra and Electrocore LLC

Considering the 90-day investment horizon Penumbra is expected to generate 4.03 times less return on investment than Electrocore LLC. But when comparing it to its historical volatility, Penumbra is 2.27 times less risky than Electrocore LLC. It trades about 0.13 of its potential returns per unit of risk. Electrocore LLC is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  618.00  in Electrocore LLC on September 3, 2024 and sell it today you would earn a total of  602.00  from holding Electrocore LLC or generate 97.41% return on investment over 90 days.

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

Penumbra  vs.  Electrocore LLC

Penumbra

Risk-Adjusted Performance

10 of 100

OK

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

Electrocore LLC

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Electrocore LLC are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Electrocore LLC reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Penumbra and Electrocore LLC

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

The idea behind Penumbra and Electrocore LLC 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.