Correlation Between Timken and EnVVeno Medical

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

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

Diversification Opportunities for Timken and EnVVeno Medical

0.11

Correlation Coefficient

Timken  EnVVeno Medical

Average diversification

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

Pair Corralation between Timken and EnVVeno Medical

Considering the 90-day investment horizon Timken Company is expected to generate 0.42 times more return on investment than EnVVeno Medical. However, Timken Company is 2.39 times less risky than EnVVeno Medical. It trades about 0.02 of its potential returns per unit of risk. enVVeno Medical Corp is currently generating about 0.0 per unit of risk. If you would invest  6,900  in Timken Company on September 14, 2024 and sell it today you would earn a total of  698.00  from holding Timken Company or generate 10.12% return on investment over 90 days.

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

Timken Company  vs.  enVVeno Medical Corp

Timken Company

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Timken Company has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward-looking signals, Timken is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

enVVeno Medical Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days enVVeno Medical Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Timken and EnVVeno Medical

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

The idea behind Timken Company and enVVeno Medical Corp 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.