Correlation Between Iradimed and Orthofix Medical

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

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

Diversification Opportunities for Iradimed and Orthofix Medical

0.43

Correlation Coefficient

Iradimed  Orthofix Medical

Very weak diversification

The 3 months correlation between Iradimed and Orthofix is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Iradimed Co and Orthofix Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orthofix Medical and Iradimed 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 Iradimed Co are associated (or correlated) with Orthofix Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orthofix Medical has no effect on the direction of Iradimed i.e., Iradimed and Orthofix Medical go up and down completely randomly.

Pair Corralation between Iradimed and Orthofix Medical

Given the investment horizon of 90 days Iradimed Co is expected to generate 0.96 times more return on investment than Orthofix Medical. However, Iradimed Co is 1.04 times less risky than Orthofix Medical. It trades about 0.11 of its potential returns per unit of risk. Orthofix Medical is currently generating about 0.07 per unit of risk. If you would invest  4,906  in Iradimed Co on August 17, 2024 and sell it today you would earn a total of  500.00  from holding Iradimed Co or generate 10.19% return on investment over 90 days.

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

Iradimed Co  vs.  Orthofix Medical

Iradimed

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Iradimed Co are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile primary indicators, Iradimed exhibited solid returns over the last few months and may actually be approaching a breakup point.

Orthofix Medical

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Orthofix Medical are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady forward indicators, Orthofix Medical may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Iradimed and Orthofix Medical

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

The idea behind Iradimed Co and Orthofix Medical 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.