Correlation Between CONMED and Masimo

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

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

Diversification Opportunities for CONMED and Masimo

-0.16

Correlation Coefficient

CONMED  Masimo

Good diversification

The 3 months correlation between CONMED and Masimo is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding CONMED and Masimo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Masimo and CONMED 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 CONMED are associated (or correlated) with Masimo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Masimo has no effect on the direction of CONMED i.e., CONMED and Masimo go up and down completely randomly.

Pair Corralation between CONMED and Masimo

Given the investment horizon of 90 days CONMED is expected to under-perform the Masimo. But the stock apears to be less risky and, when comparing its historical volatility, CONMED is 1.12 times less risky than Masimo. The stock trades about -0.1 of its potential returns per unit of risk. The Masimo is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  16,859  in Masimo on December 29, 2024 and sell it today you would lose (504.00) from holding Masimo or give up 2.99% of portfolio value over 90 days.

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

CONMED  vs.  Masimo

CONMED

Risk-Adjusted Performance

Very Weak

Over the last 90 days CONMED has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's primary indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Masimo

Risk-Adjusted Performance

Very Weak

Over the last 90 days Masimo has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Masimo is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with CONMED and Masimo

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

The idea behind CONMED and Masimo 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.