Correlation Between Shockwave Medical and InMode

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

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

Diversification Opportunities for Shockwave Medical and InMode

0.06

Correlation Coefficient

Shockwave Medical  InMode

Significant diversification

The 3 months correlation between Shockwave and InMode is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Shockwave Medical and InMode in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InMode and Shockwave 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 Shockwave Medical are associated (or correlated) with InMode. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InMode has no effect on the direction of Shockwave Medical i.e., Shockwave Medical and InMode go up and down completely randomly.

Pair Corralation between Shockwave Medical and InMode

If you would invest  1,641  in InMode on September 23, 2024 and sell it today you would earn a total of  67.00  from holding InMode or generate 4.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	1.54%
Values	Daily Returns

Shockwave Medical  vs.  InMode

Shockwave Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shockwave Medical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Shockwave Medical is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

InMode

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in InMode are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound primary indicators, InMode is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Shockwave Medical and InMode

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

The idea behind Shockwave Medical and InMode 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.