Correlation Between Inari Medical and Insulet
Can any of the company-specific risk be diversified away by investing in both Inari Medical and Insulet 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 Insulet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inari Medical and Insulet, you can compare the effects of market volatilities on Inari Medical and Insulet 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 Insulet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inari Medical and Insulet.
Diversification Opportunities for Inari Medical and Insulet
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Inari and Insulet is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Inari Medical and Insulet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insulet 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 Insulet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insulet has no effect on the direction of Inari Medical i.e., Inari Medical and Insulet go up and down completely randomly.
Pair Corralation between Inari Medical and Insulet
Given the investment horizon of 90 days Inari Medical is expected to generate 1.76 times less return on investment than Insulet. In addition to that, Inari Medical is 1.91 times more volatile than Insulet. It trades about 0.07 of its total potential returns per unit of risk. Insulet is currently generating about 0.25 per unit of volatility. If you would invest 20,442 in Insulet on August 28, 2024 and sell it today you would earn a total of 6,200 from holding Insulet or generate 30.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Inari Medical vs. Insulet
Performance |
| Timeline |
| Inari Medical |
| Insulet |
Inari Medical and Insulet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inari Medical and Insulet
The main advantage of trading using opposite Inari Medical and Insulet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inari Medical position performs unexpectedly, Insulet 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 Insulet will offset losses from the drop in Insulet's long position.The idea behind Inari Medical and Insulet 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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