Correlation Between Inari Medical and PetMed Express

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Can any of the company-specific risk be diversified away by investing in both Inari Medical and PetMed Express 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 Inari Medical and PetMed Express into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inari Medical and PetMed Express, you can compare the effects of market volatilities on Inari Medical and PetMed Express 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 Inari Medical with a short position of PetMed Express. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inari Medical and PetMed Express.

Diversification Opportunities for Inari Medical and PetMed Express

0.11
  Correlation Coefficient

Average diversification

The 3 months correlation between Inari and PetMed is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Inari Medical and PetMed Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PetMed Express and Inari 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 Inari Medical are associated (or correlated) with PetMed Express. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PetMed Express has no effect on the direction of Inari Medical i.e., Inari Medical and PetMed Express go up and down completely randomly.

Pair Corralation between Inari Medical and PetMed Express

Given the investment horizon of 90 days Inari Medical is expected to generate 2.63 times more return on investment than PetMed Express. However, Inari Medical is 2.63 times more volatile than PetMed Express. It trades about 0.29 of its potential returns per unit of risk. PetMed Express is currently generating about 0.05 per unit of risk. If you would invest  5,180  in Inari Medical on November 3, 2024 and sell it today you would earn a total of  2,787  from holding Inari Medical or generate 53.8% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Inari Medical  vs.  PetMed Express

 Performance 
       Timeline  
Inari Medical 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Inari Medical are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal basic indicators, Inari Medical demonstrated solid returns over the last few months and may actually be approaching a breakup point.
PetMed Express 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in PetMed Express are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, PetMed Express unveiled solid returns over the last few months and may actually be approaching a breakup point.

Inari Medical and PetMed Express Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Inari Medical and PetMed Express

The main advantage of trading using opposite Inari Medical and PetMed Express positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inari Medical position performs unexpectedly, PetMed Express 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 PetMed Express will offset losses from the drop in PetMed Express' long position.
The idea behind Inari Medical and PetMed Express 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.

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