Correlation Between InMode and 832696AV0

Can any of the company-specific risk be diversified away by investing in both InMode and 832696AV0 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 832696AV0 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between InMode and SJM 275 15 SEP 41, you can compare the effects of market volatilities on InMode and 832696AV0 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 832696AV0. Check out your portfolio center. Please also check ongoing floating volatility patterns of InMode and 832696AV0.

Diversification Opportunities for InMode and 832696AV0

0.68

Correlation Coefficient

InMode  832696AV0

Poor diversification

The 3 months correlation between InMode and 832696AV0 is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding InMode and SJM 275 15 SEP 41 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SJM 275 15 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 832696AV0. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SJM 275 15 has no effect on the direction of InMode i.e., InMode and 832696AV0 go up and down completely randomly.

Pair Corralation between InMode and 832696AV0

Given the investment horizon of 90 days InMode is expected to generate 0.98 times more return on investment than 832696AV0. However, InMode is 1.02 times less risky than 832696AV0. It trades about 0.03 of its potential returns per unit of risk. SJM 275 15 SEP 41 is currently generating about -0.01 per unit of risk. If you would invest  1,746  in InMode on September 18, 2024 and sell it today you would earn a total of  51.00  from holding InMode or generate 2.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	41.27%
Values	Daily Returns

InMode  vs.  SJM 275 15 SEP 41

InMode

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in InMode are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound primary indicators, InMode is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

SJM 275 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SJM 275 15 SEP 41 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 832696AV0 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with InMode and 832696AV0

The main advantage of trading using opposite InMode and 832696AV0 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InMode position performs unexpectedly, 832696AV0 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 832696AV0 will offset losses from the drop in 832696AV0's long position.

The idea behind InMode and SJM 275 15 SEP 41 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.