Correlation Between Inspire Medical and Air Transport
Can any of the company-specific risk be diversified away by investing in both Inspire Medical and Air Transport 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 Inspire Medical and Air Transport into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inspire Medical Systems and Air Transport Services, you can compare the effects of market volatilities on Inspire Medical and Air Transport 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 Inspire Medical with a short position of Air Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inspire Medical and Air Transport.
Diversification Opportunities for Inspire Medical and Air Transport
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Inspire and Air is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Inspire Medical Systems and Air Transport Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Transport Services and Inspire 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 Inspire Medical Systems are associated (or correlated) with Air Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Transport Services has no effect on the direction of Inspire Medical i.e., Inspire Medical and Air Transport go up and down completely randomly.
Pair Corralation between Inspire Medical and Air Transport
Assuming the 90 days horizon Inspire Medical Systems is expected to generate 5.09 times more return on investment than Air Transport. However, Inspire Medical is 5.09 times more volatile than Air Transport Services. It trades about 0.05 of its potential returns per unit of risk. Air Transport Services is currently generating about 0.19 per unit of risk. If you would invest 18,025 in Inspire Medical Systems on November 3, 2024 and sell it today you would earn a total of 505.00 from holding Inspire Medical Systems or generate 2.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Inspire Medical Systems vs. Air Transport Services
Performance |
| Timeline |
| Inspire Medical Systems |
| Air Transport Services |
Inspire Medical and Air Transport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inspire Medical and Air Transport
The main advantage of trading using opposite Inspire Medical and Air Transport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inspire Medical position performs unexpectedly, Air Transport 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 Air Transport will offset losses from the drop in Air Transport's long position.| Inspire Medical vs. Phibro Animal Health | Inspire Medical vs. ASURE SOFTWARE | Inspire Medical vs. Cardinal Health | Inspire Medical vs. PURETECH HEALTH PLC |
| Air Transport vs. BURLINGTON STORES | Air Transport vs. MAG SILVER | Air Transport vs. GOME Retail Holdings | Air Transport vs. Yanzhou Coal Mining |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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