Correlation Between Pitney Bowes and GERATHERM MEDICAL

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

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

Diversification Opportunities for Pitney Bowes and GERATHERM MEDICAL

0.65

Correlation Coefficient

Pitney Bowes  GERATHERM MEDICAL

Poor diversification

The 3 months correlation between Pitney and GERATHERM is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Pitney Bowes and GERATHERM MEDICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GERATHERM MEDICAL and Pitney Bowes 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 Pitney Bowes are associated (or correlated) with GERATHERM MEDICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GERATHERM MEDICAL has no effect on the direction of Pitney Bowes i.e., Pitney Bowes and GERATHERM MEDICAL go up and down completely randomly.

Pair Corralation between Pitney Bowes and GERATHERM MEDICAL

Considering the 90-day investment horizon Pitney Bowes is expected to generate 1.06 times more return on investment than GERATHERM MEDICAL. However, Pitney Bowes is 1.06 times more volatile than GERATHERM MEDICAL. It trades about 0.16 of its potential returns per unit of risk. GERATHERM MEDICAL is currently generating about 0.09 per unit of risk. If you would invest  895.00  in Pitney Bowes on May 5, 2025 and sell it today you would earn a total of  230.00  from holding Pitney Bowes or generate 25.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Pitney Bowes  vs.  GERATHERM MEDICAL

Pitney Bowes

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pitney Bowes are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady fundamental drivers, Pitney Bowes demonstrated solid returns over the last few months and may actually be approaching a breakup point.

GERATHERM MEDICAL

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in GERATHERM MEDICAL are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, GERATHERM MEDICAL unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pitney Bowes and GERATHERM MEDICAL

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

The idea behind Pitney Bowes and GERATHERM 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.

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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..