Correlation Between InMode and Alphabet

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

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

Diversification Opportunities for InMode and Alphabet

-0.72

Correlation Coefficient

InMode  Alphabet

Pay attention - limited upside

The 3 months correlation between InMode and Alphabet is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding InMode and Alphabet Inc Class C in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alphabet Class C and InMode 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 InMode are associated (or correlated) with Alphabet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alphabet Class C has no effect on the direction of InMode i.e., InMode and Alphabet go up and down completely randomly.

Pair Corralation between InMode and Alphabet

Given the investment horizon of 90 days InMode is expected to under-perform the Alphabet. In addition to that, InMode is 1.04 times more volatile than Alphabet Inc Class C. It trades about -0.02 of its total potential returns per unit of risk. Alphabet Inc Class C is currently generating about 0.01 per unit of volatility. If you would invest  17,278  in Alphabet Inc Class C on December 2, 2024 and sell it today you would lose (56.00) from holding Alphabet Inc Class C or give up 0.32% of portfolio value over 90 days.

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

InMode  vs.  Alphabet Inc Class C

InMode

Risk-Adjusted Performance

Very Weak

Over the last 90 days InMode has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, InMode is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Alphabet Class C

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alphabet Inc Class C has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Alphabet is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with InMode and Alphabet

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

The idea behind InMode and Alphabet Inc Class C 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.