Correlation Between Insulet and PLAYMATES TOYS

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Can any of the company-specific risk be diversified away by investing in both Insulet and PLAYMATES TOYS 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 PLAYMATES TOYS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Insulet and PLAYMATES TOYS, you can compare the effects of market volatilities on Insulet and PLAYMATES TOYS 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 PLAYMATES TOYS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insulet and PLAYMATES TOYS.

Diversification Opportunities for Insulet and PLAYMATES TOYS

InsuletPLAYMATESDiversified AwayInsuletPLAYMATESDiversified Away100%
-0.63
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Insulet and PLAYMATES is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Insulet and PLAYMATES TOYS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLAYMATES TOYS 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 PLAYMATES TOYS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PLAYMATES TOYS has no effect on the direction of Insulet i.e., Insulet and PLAYMATES TOYS go up and down completely randomly.

Pair Corralation between Insulet and PLAYMATES TOYS

Assuming the 90 days horizon Insulet is expected to generate 0.46 times more return on investment than PLAYMATES TOYS. However, Insulet is 2.17 times less risky than PLAYMATES TOYS. It trades about 0.18 of its potential returns per unit of risk. PLAYMATES TOYS is currently generating about -0.02 per unit of risk. If you would invest  21,770  in Insulet on October 20, 2024 and sell it today you would earn a total of  5,040  from holding Insulet or generate 23.15% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Insulet  vs.  PLAYMATES TOYS

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 -10-50510152025
JavaScript chart by amCharts 3.21.15GOV 45P
       Timeline  
Insulet 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Insulet are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Insulet reported solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan210220230240250260
PLAYMATES TOYS 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days PLAYMATES TOYS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, PLAYMATES TOYS is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan0.0620.0640.0660.0680.070.0720.0740.076

Insulet and PLAYMATES TOYS Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-6.06-4.54-3.01-1.490.02781.673.345.06.67 0.020.040.060.080.10
JavaScript chart by amCharts 3.21.15GOV 45P
       Returns  

Pair Trading with Insulet and PLAYMATES TOYS

The main advantage of trading using opposite Insulet and PLAYMATES TOYS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insulet position performs unexpectedly, PLAYMATES TOYS 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 PLAYMATES TOYS will offset losses from the drop in PLAYMATES TOYS's long position.
The idea behind Insulet and PLAYMATES TOYS 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.
Check out your portfolio center.
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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