Correlation Between Integra LifeSciences and Insulet

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

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

Diversification Opportunities for Integra LifeSciences and Insulet

0.66

Correlation Coefficient

Integra LifeSciences  Insulet

Poor diversification

The 3 months correlation between Integra and Insulet is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Integra LifeSciences Holdings and Insulet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insulet and Integra LifeSciences 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 Integra LifeSciences Holdings are associated (or correlated) with Insulet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insulet has no effect on the direction of Integra LifeSciences i.e., Integra LifeSciences and Insulet go up and down completely randomly.

Pair Corralation between Integra LifeSciences and Insulet

Given the investment horizon of 90 days Integra LifeSciences Holdings is expected to generate 2.35 times more return on investment than Insulet. However, Integra LifeSciences is 2.35 times more volatile than Insulet. It trades about 0.11 of its potential returns per unit of risk. Insulet is currently generating about 0.24 per unit of risk. If you would invest  1,927  in Integra LifeSciences Holdings on September 3, 2024 and sell it today you would earn a total of  531.00  from holding Integra LifeSciences Holdings or generate 27.56% return on investment over 90 days.

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

Integra LifeSciences Holdings  vs.  Insulet

Integra LifeSciences

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Integra LifeSciences Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Integra LifeSciences unveiled solid returns over the last few months and may actually be approaching a breakup point.

Insulet

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Insulet are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Insulet exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Integra LifeSciences and Insulet

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

The idea behind Integra LifeSciences Holdings and Insulet 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.