Correlation Between Inspire Medical and PPG Industries
Can any of the company-specific risk be diversified away by investing in both Inspire Medical and PPG Industries 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 PPG Industries 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 PPG Industries, you can compare the effects of market volatilities on Inspire Medical and PPG Industries 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 PPG Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inspire Medical and PPG Industries.
Diversification Opportunities for Inspire Medical and PPG Industries
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Inspire and PPG is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Inspire Medical Systems and PPG Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PPG Industries 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 PPG Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PPG Industries has no effect on the direction of Inspire Medical i.e., Inspire Medical and PPG Industries go up and down completely randomly.
Pair Corralation between Inspire Medical and PPG Industries
Assuming the 90 days horizon Inspire Medical Systems is expected to generate 1.53 times more return on investment than PPG Industries. However, Inspire Medical is 1.53 times more volatile than PPG Industries. It trades about 0.06 of its potential returns per unit of risk. PPG Industries is currently generating about -0.6 per unit of risk. If you would invest 18,010 in Inspire Medical Systems on October 9, 2024 and sell it today you would earn a total of 225.00 from holding Inspire Medical Systems or generate 1.25% 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. PPG Industries
Performance |
| Timeline |
| Inspire Medical Systems |
| PPG Industries |
Inspire Medical and PPG Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inspire Medical and PPG Industries
The main advantage of trading using opposite Inspire Medical and PPG Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inspire Medical position performs unexpectedly, PPG Industries 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 PPG Industries will offset losses from the drop in PPG Industries' long position.| Inspire Medical vs. Boston Scientific | Inspire Medical vs. Zimmer Biomet Holdings | Inspire Medical vs. Align Technology | Inspire Medical vs. Superior Plus Corp |
| PPG Industries vs. Cogent Communications Holdings | PPG Industries vs. EIDESVIK OFFSHORE NK | PPG Industries vs. Eidesvik Offshore ASA | PPG Industries vs. Singapore Telecommunications Limited |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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