Correlation Between Axonics Modulation and IRhythm Technologies

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

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

Diversification Opportunities for Axonics Modulation and IRhythm Technologies

0.72

Correlation Coefficient

Axonics Modulation  IRhythm Technologies

Poor diversification

The 3 months correlation between Axonics and IRhythm is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Axonics Modulation Technologie and iRhythm Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iRhythm Technologies and Axonics Modulation 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 Axonics Modulation Technologies are associated (or correlated) with IRhythm Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iRhythm Technologies has no effect on the direction of Axonics Modulation i.e., Axonics Modulation and IRhythm Technologies go up and down completely randomly.

Pair Corralation between Axonics Modulation and IRhythm Technologies

Given the investment horizon of 90 days Axonics Modulation Technologies is expected to generate 0.09 times more return on investment than IRhythm Technologies. However, Axonics Modulation Technologies is 10.79 times less risky than IRhythm Technologies. It trades about 0.05 of its potential returns per unit of risk. iRhythm Technologies is currently generating about -0.01 per unit of risk. If you would invest  6,872  in Axonics Modulation Technologies on September 8, 2024 and sell it today you would earn a total of  226.00  from holding Axonics Modulation Technologies or generate 3.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	93.45%
Values	Daily Returns

Axonics Modulation Technologie  vs.  iRhythm Technologies

Axonics Modulation

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Axonics Modulation Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Axonics Modulation is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

iRhythm Technologies

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iRhythm Technologies are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, IRhythm Technologies exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Axonics Modulation and IRhythm Technologies

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

The idea behind Axonics Modulation Technologies and iRhythm Technologies 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 Global Correlations module to find global opportunities by holding instruments from different markets.