Correlation Between Inogen and InMode

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

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

Diversification Opportunities for Inogen and InMode

0.24

Correlation Coefficient

Inogen  InMode

Modest diversification

The 3 months correlation between Inogen and InMode is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Inogen Inc and InMode in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InMode 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 InMode. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InMode has no effect on the direction of Inogen i.e., Inogen and InMode go up and down completely randomly.

Pair Corralation between Inogen and InMode

Given the investment horizon of 90 days Inogen Inc is expected to under-perform the InMode. In addition to that, Inogen is 1.13 times more volatile than InMode. It trades about -0.08 of its total potential returns per unit of risk. InMode is currently generating about 0.04 per unit of volatility. If you would invest  1,737  in InMode on September 17, 2024 and sell it today you would earn a total of  89.00  from holding InMode or generate 5.12% return on investment over 90 days.

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

Inogen Inc  vs.  InMode

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.

InMode

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in InMode are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting primary indicators, InMode may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Inogen and InMode

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

The idea behind Inogen Inc and InMode 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.