Correlation Between IRhythm Technologies and CONMED
Can any of the company-specific risk be diversified away by investing in both IRhythm Technologies and CONMED 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 IRhythm Technologies and CONMED into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iRhythm Technologies and CONMED, you can compare the effects of market volatilities on IRhythm Technologies and CONMED 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 IRhythm Technologies with a short position of CONMED. Check out your portfolio center. Please also check ongoing floating volatility patterns of IRhythm Technologies and CONMED.
Diversification Opportunities for IRhythm Technologies and CONMED
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IRhythm and CONMED is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding iRhythm Technologies and CONMED in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CONMED and IRhythm Technologies 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 iRhythm Technologies are associated (or correlated) with CONMED. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CONMED has no effect on the direction of IRhythm Technologies i.e., IRhythm Technologies and CONMED go up and down completely randomly.
Pair Corralation between IRhythm Technologies and CONMED
Given the investment horizon of 90 days IRhythm Technologies is expected to generate 2.14 times less return on investment than CONMED. In addition to that, IRhythm Technologies is 1.64 times more volatile than CONMED. It trades about 0.1 of its total potential returns per unit of risk. CONMED is currently generating about 0.37 per unit of volatility. If you would invest 6,376 in CONMED on August 28, 2024 and sell it today you would earn a total of 1,378 from holding CONMED or generate 21.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iRhythm Technologies vs. CONMED
Performance |
| Timeline |
| iRhythm Technologies |
| CONMED |
IRhythm Technologies and CONMED Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IRhythm Technologies and CONMED
The main advantage of trading using opposite IRhythm Technologies and CONMED positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IRhythm Technologies position performs unexpectedly, CONMED 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 CONMED will offset losses from the drop in CONMED's long position.The idea behind iRhythm Technologies and CONMED 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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