Correlation Between Axogen and Neuropace

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

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

Diversification Opportunities for Axogen and Neuropace

0.64

Correlation Coefficient

Axogen  Neuropace

Poor diversification

The 3 months correlation between Axogen and Neuropace is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Axogen Inc and Neuropace in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neuropace and Axogen 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 Axogen Inc are associated (or correlated) with Neuropace. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neuropace has no effect on the direction of Axogen i.e., Axogen and Neuropace go up and down completely randomly.

Pair Corralation between Axogen and Neuropace

Given the investment horizon of 90 days Axogen Inc is expected to generate 0.73 times more return on investment than Neuropace. However, Axogen Inc is 1.37 times less risky than Neuropace. It trades about -0.01 of its potential returns per unit of risk. Neuropace is currently generating about -0.03 per unit of risk. If you would invest  1,792  in Axogen Inc on February 3, 2025 and sell it today you would lose (79.00) from holding Axogen Inc or give up 4.41% of portfolio value over 90 days.

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

Axogen Inc  vs.  Neuropace

Axogen Inc

Risk-Adjusted Performance

Very Weak

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

Neuropace

Risk-Adjusted Performance

Very Weak

Over the last 90 days Neuropace has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Axogen and Neuropace

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

The idea behind Axogen Inc and Neuropace 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.