Correlation Between IRIDEX and Owlet
Can any of the company-specific risk be diversified away by investing in both IRIDEX and Owlet 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 IRIDEX and Owlet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IRIDEX and Owlet Inc, you can compare the effects of market volatilities on IRIDEX and Owlet 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 IRIDEX with a short position of Owlet. Check out your portfolio center. Please also check ongoing floating volatility patterns of IRIDEX and Owlet.
Diversification Opportunities for IRIDEX and Owlet
Excellent diversification
The 3 months correlation between IRIDEX and Owlet is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding IRIDEX and Owlet Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Owlet Inc and IRIDEX 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 IRIDEX are associated (or correlated) with Owlet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Owlet Inc has no effect on the direction of IRIDEX i.e., IRIDEX and Owlet go up and down completely randomly.
Pair Corralation between IRIDEX and Owlet
Given the investment horizon of 90 days IRIDEX is expected to generate 2.96 times less return on investment than Owlet. But when comparing it to its historical volatility, IRIDEX is 1.04 times less risky than Owlet. It trades about 0.02 of its potential returns per unit of risk. Owlet Inc is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 287.00 in Owlet Inc on August 31, 2024 and sell it today you would earn a total of 199.00 from holding Owlet Inc or generate 69.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
IRIDEX vs. Owlet Inc
Performance |
| Timeline |
| IRIDEX |
| Owlet Inc |
IRIDEX and Owlet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IRIDEX and Owlet
The main advantage of trading using opposite IRIDEX and Owlet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IRIDEX position performs unexpectedly, Owlet 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 Owlet will offset losses from the drop in Owlet's long position.The idea behind IRIDEX and Owlet Inc 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.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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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