Correlation Between 539830BX6 and EnVVeno Medical

Can any of the company-specific risk be diversified away by investing in both 539830BX6 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 539830BX6 and EnVVeno Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between LMT 57 15 NOV 54 and enVVeno Medical Corp, you can compare the effects of market volatilities on 539830BX6 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 539830BX6 with a short position of EnVVeno Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of 539830BX6 and EnVVeno Medical.

Diversification Opportunities for 539830BX6 and EnVVeno Medical

0.6

Correlation Coefficient

539830BX6  EnVVeno Medical

Poor diversification

The 3 months correlation between 539830BX6 and EnVVeno is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding LMT 57 15 NOV 54 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 539830BX6 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 LMT 57 15 NOV 54 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 539830BX6 i.e., 539830BX6 and EnVVeno Medical go up and down completely randomly.

Pair Corralation between 539830BX6 and EnVVeno Medical

Assuming the 90 days trading horizon LMT 57 15 NOV 54 is expected to generate 0.18 times more return on investment than EnVVeno Medical. However, LMT 57 15 NOV 54 is 5.47 times less risky than EnVVeno Medical. It trades about -0.08 of its potential returns per unit of risk. enVVeno Medical Corp is currently generating about -0.19 per unit of risk. If you would invest  11,407  in LMT 57 15 NOV 54 on September 15, 2024 and sell it today you would lose (503.00) from holding LMT 57 15 NOV 54 or give up 4.41% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	93.75%
Values	Daily Returns

LMT 57 15 NOV 54  vs.  enVVeno Medical Corp

LMT 57 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LMT 57 15 NOV 54 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 539830BX6 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the 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 unfluctuating 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 539830BX6 and EnVVeno Medical

The main advantage of trading using opposite 539830BX6 and EnVVeno Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 539830BX6 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 LMT 57 15 NOV 54 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.

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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.