Correlation Between Orthofix Medical and Axogen

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

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

Diversification Opportunities for Orthofix Medical and Axogen

-0.13

Correlation Coefficient

Orthofix Medical  Axogen

Good diversification

The 3 months correlation between Orthofix and Axogen is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Orthofix Medical and Axogen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axogen Inc and Orthofix Medical 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 Orthofix Medical are associated (or correlated) with Axogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axogen Inc has no effect on the direction of Orthofix Medical i.e., Orthofix Medical and Axogen go up and down completely randomly.

Pair Corralation between Orthofix Medical and Axogen

Given the investment horizon of 90 days Orthofix Medical is expected to generate 0.57 times more return on investment than Axogen. However, Orthofix Medical is 1.76 times less risky than Axogen. It trades about 0.17 of its potential returns per unit of risk. Axogen Inc is currently generating about -0.11 per unit of risk. If you would invest  1,602  in Orthofix Medical on August 17, 2024 and sell it today you would earn a total of  158.00  from holding Orthofix Medical or generate 9.86% return on investment over 90 days.

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

Orthofix Medical  vs.  Axogen Inc

Orthofix Medical

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Orthofix Medical are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady forward indicators, Orthofix Medical may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Axogen Inc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Axogen Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with Orthofix Medical and Axogen

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

The idea behind Orthofix Medical and Axogen Inc 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.