Correlation Between Butterfly Network and InMode

Can any of the company-specific risk be diversified away by investing in both Butterfly Network 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 Butterfly Network and InMode into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Butterfly Network and InMode, you can compare the effects of market volatilities on Butterfly Network 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 Butterfly Network with a short position of InMode. Check out your portfolio center. Please also check ongoing floating volatility patterns of Butterfly Network and InMode.

Diversification Opportunities for Butterfly Network and InMode

0.07

Correlation Coefficient

Butterfly Network  InMode

Significant diversification

The 3 months correlation between Butterfly and InMode is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Butterfly Network and InMode in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InMode and Butterfly Network 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 Butterfly Network 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 Butterfly Network i.e., Butterfly Network and InMode go up and down completely randomly.

Pair Corralation between Butterfly Network and InMode

Given the investment horizon of 90 days Butterfly Network is expected to under-perform the InMode. In addition to that, Butterfly Network is 2.47 times more volatile than InMode. It trades about -0.13 of its total potential returns per unit of risk. InMode is currently generating about -0.02 per unit of volatility. If you would invest  1,425  in InMode on May 5, 2025 and sell it today you would lose (51.00) from holding InMode or give up 3.58% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Butterfly Network  vs.  InMode

Butterfly Network

Risk-Adjusted Performance

Very Weak

Over the last 90 days Butterfly Network has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's essential indicators remain fairly strong which may send shares a bit higher in September 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

InMode

Risk-Adjusted Performance

Very Weak

Over the last 90 days InMode has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, InMode is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Butterfly Network and InMode

The main advantage of trading using opposite Butterfly Network and InMode positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Butterfly Network 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.

The idea behind Butterfly Network and InMode 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.

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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.