Correlation Between Nuwellis and Bioventus

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

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

Diversification Opportunities for Nuwellis and Bioventus

0.12

Correlation Coefficient

Nuwellis  Bioventus

Average diversification

The 3 months correlation between Nuwellis and Bioventus is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Nuwellis and Bioventus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bioventus 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 Bioventus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bioventus has no effect on the direction of Nuwellis i.e., Nuwellis and Bioventus go up and down completely randomly.

Pair Corralation between Nuwellis and Bioventus

Given the investment horizon of 90 days Nuwellis is expected to under-perform the Bioventus. In addition to that, Nuwellis is 2.85 times more volatile than Bioventus. It trades about -0.04 of its total potential returns per unit of risk. Bioventus is currently generating about 0.14 per unit of volatility. If you would invest  437.00  in Bioventus on February 22, 2024 and sell it today you would earn a total of  193.00  from holding Bioventus or generate 44.16% return on investment over 90 days.

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

Nuwellis  vs.  Bioventus

Nuwellis

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nuwellis has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in June 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Bioventus

Risk-Adjusted Performance

10 of 100

OK

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

Pair Trading with Nuwellis and Bioventus

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

The idea behind Nuwellis and Bioventus 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.