Correlation Between MSP Recovery and Insulet

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

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

Diversification Opportunities for MSP Recovery and Insulet

-0.75

Correlation Coefficient

MSP Recovery  Insulet

Pay attention - limited upside

The 3 months correlation between MSP and Insulet is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding MSP Recovery and Insulet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insulet and MSP Recovery 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 MSP Recovery 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 MSP Recovery i.e., MSP Recovery and Insulet go up and down completely randomly.

Pair Corralation between MSP Recovery and Insulet

Assuming the 90 days horizon MSP Recovery is expected to generate 5.23 times more return on investment than Insulet. However, MSP Recovery is 5.23 times more volatile than Insulet. It trades about 0.08 of its potential returns per unit of risk. Insulet is currently generating about 0.1 per unit of risk. If you would invest  3.25  in MSP Recovery on March 28, 2025 and sell it today you would earn a total of  0.23  from holding MSP Recovery or generate 7.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.16%
Values	Daily Returns

MSP Recovery  vs.  Insulet

MSP Recovery

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in MSP Recovery are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, MSP Recovery showed solid returns over the last few months and may actually be approaching a breakup point.

Insulet

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Insulet are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Insulet exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MSP Recovery and Insulet

The main advantage of trading using opposite MSP Recovery and Insulet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MSP Recovery 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 MSP Recovery 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.