Correlation Between TransMedics and Shockwave Medical

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

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

Diversification Opportunities for TransMedics and Shockwave Medical

0.0

Correlation Coefficient

TransMedics  Shockwave Medical

Pay attention - limited upside

The 3 months correlation between TransMedics and Shockwave is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding TransMedics Group and Shockwave Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shockwave Medical and TransMedics 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 TransMedics Group are associated (or correlated) with Shockwave Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shockwave Medical has no effect on the direction of TransMedics i.e., TransMedics and Shockwave Medical go up and down completely randomly.

Pair Corralation between TransMedics and Shockwave Medical

If you would invest  7,502  in TransMedics Group on February 15, 2025 and sell it today you would earn a total of  4,734  from holding TransMedics Group or generate 63.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

TransMedics Group  vs.  Shockwave Medical

TransMedics Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TransMedics Group are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, TransMedics showed solid returns over the last few months and may actually be approaching a breakup point.

Shockwave Medical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shockwave Medical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Shockwave Medical is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with TransMedics and Shockwave Medical

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

The idea behind TransMedics Group and Shockwave Medical 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.