Correlation Between Insulet and Inari Medical

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

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

Diversification Opportunities for Insulet and Inari Medical

-0.65

Correlation Coefficient

Insulet  Inari Medical

Excellent diversification

The 3 months correlation between Insulet and Inari is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Insulet and Inari Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inari Medical 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 Inari Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inari Medical has no effect on the direction of Insulet i.e., Insulet and Inari Medical go up and down completely randomly.

Pair Corralation between Insulet and Inari Medical

Given the investment horizon of 90 days Insulet is expected to under-perform the Inari Medical. But the stock apears to be less risky and, when comparing its historical volatility, Insulet is 2.47 times less risky than Inari Medical. The stock trades about -0.02 of its potential returns per unit of risk. The Inari Medical is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  4,243  in Inari Medical on July 26, 2024 and sell it today you would earn a total of  153.00  from holding Inari Medical or generate 3.61% return on investment over 90 days.

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

Insulet  vs.  Inari Medical

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.

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.

Pair Trading with Insulet and Inari Medical

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

The idea behind Insulet and Inari 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.