Correlation Between Inspire Medical and STMICROELECTRONICS
Can any of the company-specific risk be diversified away by investing in both Inspire Medical and STMICROELECTRONICS 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 STMICROELECTRONICS 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 STMICROELECTRONICS, you can compare the effects of market volatilities on Inspire Medical and STMICROELECTRONICS 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 STMICROELECTRONICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inspire Medical and STMICROELECTRONICS.
Diversification Opportunities for Inspire Medical and STMICROELECTRONICS
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Inspire and STMICROELECTRONICS is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Inspire Medical Systems and STMICROELECTRONICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMICROELECTRONICS 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 STMICROELECTRONICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STMICROELECTRONICS has no effect on the direction of Inspire Medical i.e., Inspire Medical and STMICROELECTRONICS go up and down completely randomly.
Pair Corralation between Inspire Medical and STMICROELECTRONICS
Assuming the 90 days horizon Inspire Medical Systems is expected to generate 1.64 times more return on investment than STMICROELECTRONICS. However, Inspire Medical is 1.64 times more volatile than STMICROELECTRONICS. It trades about 0.01 of its potential returns per unit of risk. STMICROELECTRONICS is currently generating about -0.03 per unit of risk. If you would invest 23,050 in Inspire Medical Systems on October 11, 2024 and sell it today you would lose (3,325) from holding Inspire Medical Systems or give up 14.43% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Inspire Medical Systems vs. STMICROELECTRONICS
Performance |
Timeline |
Inspire Medical Systems |
STMICROELECTRONICS |
Inspire Medical and STMICROELECTRONICS Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Inspire Medical and STMICROELECTRONICS
The main advantage of trading using opposite Inspire Medical and STMICROELECTRONICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inspire Medical position performs unexpectedly, STMICROELECTRONICS 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 STMICROELECTRONICS will offset losses from the drop in STMICROELECTRONICS's long position.Inspire Medical vs. The Hongkong and | Inspire Medical vs. EIDESVIK OFFSHORE NK | Inspire Medical vs. Japan Tobacco | Inspire Medical vs. Dalata Hotel Group |
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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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