Correlation Between Avita Medical and Inari Medical
Can any of the company-specific risk be diversified away by investing in both Avita Medical and Inari Medical 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 Avita Medical and Inari Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avita Medical and Inari Medical, you can compare the effects of market volatilities on Avita Medical and Inari Medical 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 Avita Medical with a short position of Inari Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avita Medical and Inari Medical.
Diversification Opportunities for Avita Medical and Inari Medical
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Avita and Inari is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Avita Medical and Inari Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inari Medical and Avita 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 Avita Medical are associated (or correlated) with Inari Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inari Medical has no effect on the direction of Avita Medical i.e., Avita Medical and Inari Medical go up and down completely randomly.
Pair Corralation between Avita Medical and Inari Medical
Given the investment horizon of 90 days Avita Medical is expected to generate 1.4 times more return on investment than Inari Medical. However, Avita Medical is 1.4 times more volatile than Inari Medical. It trades about 0.05 of its potential returns per unit of risk. Inari Medical is currently generating about 0.0 per unit of risk. If you would invest 718.00 in Avita Medical on August 31, 2024 and sell it today you would earn a total of 564.00 from holding Avita Medical or generate 78.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Avita Medical vs. Inari Medical
Performance |
| Timeline |
| Avita Medical |
| Inari Medical |
Avita Medical and Inari Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avita Medical and Inari Medical
The main advantage of trading using opposite Avita Medical and Inari Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avita Medical position performs unexpectedly, Inari Medical 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 Inari Medical will offset losses from the drop in Inari Medical's long position.| Avita Medical vs. Abbott Laboratories | Avita Medical vs. Medtronic PLC | Avita Medical vs. Edwards Lifesciences Corp | Avita Medical vs. ZimVie Inc |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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