Correlation Between Inspire Medical and Air New
Can any of the company-specific risk be diversified away by investing in both Inspire Medical and Air New 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 New 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 New Zealand, you can compare the effects of market volatilities on Inspire Medical and Air New 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 New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inspire Medical and Air New.
Diversification Opportunities for Inspire Medical and Air New
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Inspire and Air is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Inspire Medical Systems and Air New Zealand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air New Zealand 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 New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air New Zealand has no effect on the direction of Inspire Medical i.e., Inspire Medical and Air New go up and down completely randomly.
Pair Corralation between Inspire Medical and Air New
Assuming the 90 days horizon Inspire Medical Systems is expected to generate 1.33 times more return on investment than Air New. However, Inspire Medical is 1.33 times more volatile than Air New Zealand. It trades about 0.05 of its potential returns per unit of risk. Air New Zealand is currently generating about 0.05 per unit of risk. If you would invest 16,040 in Inspire Medical Systems on November 2, 2024 and sell it today you would earn a total of 1,790 from holding Inspire Medical Systems or generate 11.16% 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 New Zealand
Performance |
| Timeline |
| Inspire Medical Systems |
| Air New Zealand |
Inspire Medical and Air New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inspire Medical and Air New
The main advantage of trading using opposite Inspire Medical and Air New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inspire Medical position performs unexpectedly, Air New 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 New will offset losses from the drop in Air New's long position.| Inspire Medical vs. G8 EDUCATION | Inspire Medical vs. Sunstone Hotel Investors | Inspire Medical vs. MHP Hotel AG | Inspire Medical vs. CAREER EDUCATION |
| Air New vs. Virtu Financial | Air New vs. Discover Financial Services | Air New vs. SUN LIFE FINANCIAL | Air New vs. SIDETRADE EO 1 |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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