Correlation Between Inogen and Butterfly Network

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

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

Diversification Opportunities for Inogen and Butterfly Network

0.03

Correlation Coefficient

Inogen  Butterfly Network

Significant diversification

The 3 months correlation between Inogen and Butterfly is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Inogen Inc and Butterfly Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Butterfly Network and Inogen 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 Inogen Inc are associated (or correlated) with Butterfly Network. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Butterfly Network has no effect on the direction of Inogen i.e., Inogen and Butterfly Network go up and down completely randomly.

Pair Corralation between Inogen and Butterfly Network

Given the investment horizon of 90 days Inogen Inc is expected to under-perform the Butterfly Network. But the stock apears to be less risky and, when comparing its historical volatility, Inogen Inc is 1.33 times less risky than Butterfly Network. The stock trades about -0.01 of its potential returns per unit of risk. The Butterfly Network is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  227.00  in Butterfly Network on September 18, 2024 and sell it today you would earn a total of  133.00  from holding Butterfly Network or generate 58.59% return on investment over 90 days.

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

Inogen Inc  vs.  Butterfly Network

Inogen Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inogen Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Butterfly Network

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Butterfly Network are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting essential indicators, Butterfly Network showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Inogen and Butterfly Network

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

The idea behind Inogen Inc and Butterfly Network 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.