Correlation Between Inspire Medical and STRATA Skin
Can any of the company-specific risk be diversified away by investing in both Inspire Medical and STRATA Skin 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 STRATA Skin 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 STRATA Skin Sciences, you can compare the effects of market volatilities on Inspire Medical and STRATA Skin 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 STRATA Skin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inspire Medical and STRATA Skin.
Diversification Opportunities for Inspire Medical and STRATA Skin
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Inspire and STRATA is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Inspire Medical Systems and STRATA Skin Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STRATA Skin Sciences 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 STRATA Skin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STRATA Skin Sciences has no effect on the direction of Inspire Medical i.e., Inspire Medical and STRATA Skin go up and down completely randomly.
Pair Corralation between Inspire Medical and STRATA Skin
Given the investment horizon of 90 days Inspire Medical Systems is expected to generate 0.94 times more return on investment than STRATA Skin. However, Inspire Medical Systems is 1.06 times less risky than STRATA Skin. It trades about 0.04 of its potential returns per unit of risk. STRATA Skin Sciences is currently generating about -0.03 per unit of risk. If you would invest 16,509 in Inspire Medical Systems on September 3, 2024 and sell it today you would earn a total of 2,767 from holding Inspire Medical Systems or generate 16.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Inspire Medical Systems vs. STRATA Skin Sciences
Performance |
| Timeline |
| Inspire Medical Systems |
| STRATA Skin Sciences |
Inspire Medical and STRATA Skin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inspire Medical and STRATA Skin
The main advantage of trading using opposite Inspire Medical and STRATA Skin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inspire Medical position performs unexpectedly, STRATA Skin 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 STRATA Skin will offset losses from the drop in STRATA Skin's long position.| Inspire Medical vs. TransMedics Group | Inspire Medical vs. Inari Medical | Inspire Medical vs. InMode | Inspire Medical vs. Insulet |
| STRATA Skin vs. Tandem Diabetes Care | STRATA Skin vs. Inspire Medical Systems | STRATA Skin vs. Penumbra | STRATA Skin vs. Insulet |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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