Correlation Between Inogen and ICU Medical

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

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

Diversification Opportunities for Inogen and ICU Medical

0.07

Correlation Coefficient

Inogen  ICU Medical

Significant diversification

The 3 months correlation between Inogen and ICU is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Inogen Inc and ICU Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ICU Medical 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 ICU Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ICU Medical has no effect on the direction of Inogen i.e., Inogen and ICU Medical go up and down completely randomly.

Pair Corralation between Inogen and ICU Medical

Given the investment horizon of 90 days Inogen Inc is expected to generate 1.22 times more return on investment than ICU Medical. However, Inogen is 1.22 times more volatile than ICU Medical. It trades about -0.1 of its potential returns per unit of risk. ICU Medical is currently generating about -0.14 per unit of risk. If you would invest  952.00  in Inogen Inc on September 19, 2024 and sell it today you would lose (60.00) from holding Inogen Inc or give up 6.3% of portfolio value over 90 days.

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

Inogen Inc  vs.  ICU Medical

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.

ICU Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ICU Medical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Inogen and ICU Medical

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

The idea behind Inogen Inc and ICU Medical 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.