Correlation Between InMode and Inspire Medical

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

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

Diversification Opportunities for InMode and Inspire Medical

-0.38

Correlation Coefficient

InMode  Inspire Medical

Very good diversification

The 3 months correlation between InMode and Inspire is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding InMode and Inspire Medical Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inspire Medical Systems 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 Inspire Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inspire Medical Systems has no effect on the direction of InMode i.e., InMode and Inspire Medical go up and down completely randomly.

Pair Corralation between InMode and Inspire Medical

Given the investment horizon of 90 days InMode is expected to generate 0.59 times more return on investment than Inspire Medical. However, InMode is 1.69 times less risky than Inspire Medical. It trades about 0.09 of its potential returns per unit of risk. Inspire Medical Systems is currently generating about -0.05 per unit of risk. If you would invest  1,663  in InMode on December 29, 2024 and sell it today you would earn a total of  167.00  from holding InMode or generate 10.04% return on investment over 90 days.

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

InMode  vs.  Inspire Medical Systems

InMode

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in InMode are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak primary indicators, InMode may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Inspire Medical Systems

Risk-Adjusted Performance

Very Weak

Over the last 90 days Inspire Medical Systems has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with InMode and Inspire Medical

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

The idea behind InMode and Inspire Medical Systems 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.