Correlation Between Anika Therapeutics and Iradimed

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

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

Diversification Opportunities for Anika Therapeutics and Iradimed

0.41

Correlation Coefficient

Anika Therapeutics  Iradimed

Very weak diversification

The 3 months correlation between Anika and Iradimed is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Anika Therapeutics and Iradimed Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iradimed and Anika Therapeutics 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 Anika Therapeutics are associated (or correlated) with Iradimed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iradimed has no effect on the direction of Anika Therapeutics i.e., Anika Therapeutics and Iradimed go up and down completely randomly.

Pair Corralation between Anika Therapeutics and Iradimed

Given the investment horizon of 90 days Anika Therapeutics is expected to under-perform the Iradimed. In addition to that, Anika Therapeutics is 1.16 times more volatile than Iradimed Co. It trades about -0.03 of its total potential returns per unit of risk. Iradimed Co is currently generating about -0.02 per unit of volatility. If you would invest  5,492  in Iradimed Co on December 29, 2024 and sell it today you would lose (154.00) from holding Iradimed Co or give up 2.8% of portfolio value over 90 days.

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

Anika Therapeutics  vs.  Iradimed Co

Anika Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Anika Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward indicators, Anika Therapeutics is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Iradimed

Risk-Adjusted Performance

Very Weak

Over the last 90 days Iradimed Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, Iradimed is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Anika Therapeutics and Iradimed

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

The idea behind Anika Therapeutics and Iradimed Co 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.