Correlation Between Inogen and Medtronic PLC
Can any of the company-specific risk be diversified away by investing in both Inogen and Medtronic PLC 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 Inogen and Medtronic PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inogen Inc and Medtronic PLC, you can compare the effects of market volatilities on Inogen and Medtronic PLC 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 Inogen with a short position of Medtronic PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inogen and Medtronic PLC.
Diversification Opportunities for Inogen and Medtronic PLC
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Inogen and Medtronic is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Inogen Inc and Medtronic PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medtronic PLC and Inogen 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 Inogen Inc are associated (or correlated) with Medtronic PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medtronic PLC has no effect on the direction of Inogen i.e., Inogen and Medtronic PLC go up and down completely randomly.
Pair Corralation between Inogen and Medtronic PLC
Given the investment horizon of 90 days Inogen Inc is expected to under-perform the Medtronic PLC. In addition to that, Inogen is 3.04 times more volatile than Medtronic PLC. It trades about -0.16 of its total potential returns per unit of risk. Medtronic PLC is currently generating about -0.42 per unit of volatility. If you would invest 8,759 in Medtronic PLC on September 19, 2024 and sell it today you would lose (756.00) from holding Medtronic PLC or give up 8.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Inogen Inc vs. Medtronic PLC
Performance |
| Timeline |
| Inogen Inc |
| Medtronic PLC |
Inogen and Medtronic PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inogen and Medtronic PLC
The main advantage of trading using opposite Inogen and Medtronic PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inogen position performs unexpectedly, Medtronic PLC 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 Medtronic PLC will offset losses from the drop in Medtronic PLC's long position.The idea behind Inogen Inc and Medtronic PLC 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.| Medtronic PLC vs. Edwards Lifesciences Corp | Medtronic PLC vs. Abbott Laboratories | Medtronic PLC vs. Boston Scientific Corp | Medtronic PLC vs. Zimmer Biomet Holdings |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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