Correlation Between Insulet and Integra LifeSciences

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

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

Diversification Opportunities for Insulet and Integra LifeSciences

0.66

Correlation Coefficient

Insulet  Integra LifeSciences

Poor diversification

The 3 months correlation between Insulet and Integra is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Insulet and Integra LifeSciences Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Integra LifeSciences and Insulet 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 Insulet are associated (or correlated) with Integra LifeSciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Integra LifeSciences has no effect on the direction of Insulet i.e., Insulet and Integra LifeSciences go up and down completely randomly.

Pair Corralation between Insulet and Integra LifeSciences

Given the investment horizon of 90 days Insulet is expected to generate 0.86 times more return on investment than Integra LifeSciences. However, Insulet is 1.16 times less risky than Integra LifeSciences. It trades about -0.12 of its potential returns per unit of risk. Integra LifeSciences Holdings is currently generating about -0.46 per unit of risk. If you would invest  26,832  in Insulet on January 20, 2025 and sell it today you would lose (2,152) from holding Insulet or give up 8.02% of portfolio value over 90 days.

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

Insulet  vs.  Integra LifeSciences Holdings

Insulet

Risk-Adjusted Performance

Very Weak

Over the last 90 days Insulet has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Integra LifeSciences

Risk-Adjusted Performance

Very Weak

Over the last 90 days Integra LifeSciences Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in May 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Insulet and Integra LifeSciences

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

The idea behind Insulet and Integra LifeSciences 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.