Correlation Between Glaukos Corp and Insulet

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

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

Diversification Opportunities for Glaukos Corp and Insulet

0.37

Correlation Coefficient

Glaukos Corp  Insulet

Weak diversification

The 3 months correlation between Glaukos and Insulet is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Glaukos Corp and Insulet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insulet and Glaukos Corp 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 Glaukos Corp 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 Glaukos Corp i.e., Glaukos Corp and Insulet go up and down completely randomly.

Pair Corralation between Glaukos Corp and Insulet

Given the investment horizon of 90 days Glaukos Corp is expected to generate 1.71 times more return on investment than Insulet. However, Glaukos Corp is 1.71 times more volatile than Insulet. It trades about 0.06 of its potential returns per unit of risk. Insulet is currently generating about -0.02 per unit of risk. If you would invest  12,772  in Glaukos Corp on July 26, 2024 and sell it today you would earn a total of  275.00  from holding Glaukos Corp or generate 2.15% return on investment over 90 days.

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

Glaukos Corp  vs.  Insulet

Glaukos Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Glaukos Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Glaukos Corp may actually be approaching a critical reversion point that can send shares even higher in November 2024.

Insulet

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Insulet are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Insulet exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Glaukos Corp and Insulet

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

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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.