Correlation Between Penumbra and InMode
Can any of the company-specific risk be diversified away by investing in both Penumbra and InMode 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 Penumbra and InMode into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Penumbra and InMode, you can compare the effects of market volatilities on Penumbra and InMode 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 Penumbra with a short position of InMode. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penumbra and InMode.
Diversification Opportunities for Penumbra and InMode
Poor diversification
The 3 months correlation between Penumbra and InMode is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Penumbra and InMode in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InMode and Penumbra 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 Penumbra are associated (or correlated) with InMode. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InMode has no effect on the direction of Penumbra i.e., Penumbra and InMode go up and down completely randomly.
Pair Corralation between Penumbra and InMode
Considering the 90-day investment horizon Penumbra is expected to generate 0.79 times more return on investment than InMode. However, Penumbra is 1.27 times less risky than InMode. It trades about 0.02 of its potential returns per unit of risk. InMode is currently generating about -0.02 per unit of risk. If you would invest 22,000 in Penumbra on August 28, 2024 and sell it today you would earn a total of 2,468 from holding Penumbra or generate 11.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Penumbra vs. InMode
Performance |
| Timeline |
| Penumbra |
| InMode |
Penumbra and InMode Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Penumbra and InMode
The main advantage of trading using opposite Penumbra and InMode positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Penumbra position performs unexpectedly, InMode 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 InMode will offset losses from the drop in InMode's long position.| Penumbra vs. Insulet | Penumbra vs. TransMedics Group | Penumbra vs. Masimo | Penumbra vs. Inspire Medical Systems |
| InMode vs. TransMedics Group | InMode vs. Inspire Medical Systems | InMode vs. Inari Medical | InMode vs. Insulet |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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