Correlation Between IRIDEX and InfuSystems Holdings

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

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

Diversification Opportunities for IRIDEX and InfuSystems Holdings

0.62

Correlation Coefficient

IRIDEX  InfuSystems Holdings

Poor diversification

The 3 months correlation between IRIDEX and InfuSystems is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding IRIDEX and InfuSystems Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InfuSystems Holdings and IRIDEX 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 IRIDEX are associated (or correlated) with InfuSystems Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InfuSystems Holdings has no effect on the direction of IRIDEX i.e., IRIDEX and InfuSystems Holdings go up and down completely randomly.

Pair Corralation between IRIDEX and InfuSystems Holdings

Given the investment horizon of 90 days IRIDEX is expected to under-perform the InfuSystems Holdings. But the stock apears to be less risky and, when comparing its historical volatility, IRIDEX is 1.33 times less risky than InfuSystems Holdings. The stock trades about -0.15 of its potential returns per unit of risk. The InfuSystems Holdings is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  649.00  in InfuSystems Holdings on June 28, 2024 and sell it today you would lose (53.00) from holding InfuSystems Holdings or give up 8.17% of portfolio value over 90 days.

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

IRIDEX  vs.  InfuSystems Holdings

IRIDEX

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IRIDEX has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in October 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

InfuSystems Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days InfuSystems Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, InfuSystems Holdings is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with IRIDEX and InfuSystems Holdings

The main advantage of trading using opposite IRIDEX and InfuSystems Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IRIDEX position performs unexpectedly, InfuSystems Holdings 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 InfuSystems Holdings will offset losses from the drop in InfuSystems Holdings' long position.

The idea behind IRIDEX and InfuSystems Holdings 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.