Correlation Between Treace Medical and LENSAR

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

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

Diversification Opportunities for Treace Medical and LENSAR

0.55

Correlation Coefficient

Treace Medical  LENSAR

Very weak diversification

The 3 months correlation between Treace and LENSAR is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Treace Medical Concepts and LENSAR Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LENSAR Inc and Treace 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 Treace Medical Concepts are associated (or correlated) with LENSAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LENSAR Inc has no effect on the direction of Treace Medical i.e., Treace Medical and LENSAR go up and down completely randomly.

Pair Corralation between Treace Medical and LENSAR

Given the investment horizon of 90 days Treace Medical Concepts is expected to generate 1.55 times more return on investment than LENSAR. However, Treace Medical is 1.55 times more volatile than LENSAR Inc. It trades about 0.23 of its potential returns per unit of risk. LENSAR Inc is currently generating about 0.23 per unit of risk. If you would invest  537.00  in Treace Medical Concepts on August 17, 2024 and sell it today you would earn a total of  226.00  from holding Treace Medical Concepts or generate 42.09% return on investment over 90 days.

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

Treace Medical Concepts  vs.  LENSAR Inc

Treace Medical Concepts

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Treace Medical Concepts are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain fundamental indicators, Treace Medical demonstrated solid returns over the last few months and may actually be approaching a breakup point.

LENSAR Inc

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in LENSAR Inc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, LENSAR reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Treace Medical and LENSAR

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

The idea behind Treace Medical Concepts and LENSAR 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.

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.