Correlation Between Inari Medical and Insulet

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

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

Diversification Opportunities for Inari Medical and Insulet

-0.63

Correlation Coefficient

Inari Medical  Insulet

Excellent diversification

The 3 months correlation between Inari and Insulet is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Inari Medical and Insulet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insulet and Inari Medical 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 Inari Medical 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 Inari Medical i.e., Inari Medical and Insulet go up and down completely randomly.

Pair Corralation between Inari Medical and Insulet

Given the investment horizon of 90 days Inari Medical is expected to under-perform the Insulet. In addition to that, Inari Medical is 1.24 times more volatile than Insulet. It trades about -0.09 of its total potential returns per unit of risk. Insulet is currently generating about 0.15 per unit of volatility. If you would invest  19,330  in Insulet on July 26, 2024 and sell it today you would earn a total of  4,433  from holding Insulet or generate 22.93% return on investment over 90 days.

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

Inari Medical  vs.  Insulet

Inari Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inari Medical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in November 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

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 Inari Medical and Insulet

The main advantage of trading using opposite Inari Medical and Insulet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inari Medical 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 Inari Medical 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.