Correlation Between Masimo and CVRx
Can any of the company-specific risk be diversified away by investing in both Masimo and CVRx 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 Masimo and CVRx into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Masimo and CVRx Inc, you can compare the effects of market volatilities on Masimo and CVRx 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 Masimo with a short position of CVRx. Check out your portfolio center. Please also check ongoing floating volatility patterns of Masimo and CVRx.
Diversification Opportunities for Masimo and CVRx
Poor diversification
The 3 months correlation between Masimo and CVRx is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Masimo and CVRx Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVRx Inc and Masimo 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 Masimo are associated (or correlated) with CVRx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVRx Inc has no effect on the direction of Masimo i.e., Masimo and CVRx go up and down completely randomly.
Pair Corralation between Masimo and CVRx
Given the investment horizon of 90 days Masimo is expected to generate 0.37 times more return on investment than CVRx. However, Masimo is 2.69 times less risky than CVRx. It trades about 0.11 of its potential returns per unit of risk. CVRx Inc is currently generating about 0.02 per unit of risk. If you would invest 9,289 in Masimo on August 24, 2024 and sell it today you would earn a total of 7,623 from holding Masimo or generate 82.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Masimo vs. CVRx Inc
Performance |
| Timeline |
| Masimo |
| CVRx Inc |
Masimo and CVRx Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Masimo and CVRx
The main advantage of trading using opposite Masimo and CVRx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Masimo position performs unexpectedly, CVRx 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 CVRx will offset losses from the drop in CVRx's long position.The idea behind Masimo and CVRx 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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