Correlation Between Inspire Medical and Axonics Modulation

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

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

Diversification Opportunities for Inspire Medical and Axonics Modulation

-0.54

Correlation Coefficient

Inspire Medical  Axonics Modulation

Excellent diversification

The 3 months correlation between Inspire and Axonics is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Inspire Medical Systems and Axonics Modulation Technologie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axonics Modulation and Inspire Medical 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 Inspire Medical Systems are associated (or correlated) with Axonics Modulation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axonics Modulation has no effect on the direction of Inspire Medical i.e., Inspire Medical and Axonics Modulation go up and down completely randomly.

Pair Corralation between Inspire Medical and Axonics Modulation

Given the investment horizon of 90 days Inspire Medical Systems is expected to under-perform the Axonics Modulation. In addition to that, Inspire Medical is 11.54 times more volatile than Axonics Modulation Technologies. It trades about -0.01 of its total potential returns per unit of risk. Axonics Modulation Technologies is currently generating about 0.21 per unit of volatility. If you would invest  6,910  in Axonics Modulation Technologies on September 4, 2024 and sell it today you would earn a total of  188.00  from holding Axonics Modulation Technologies or generate 2.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	84.13%
Values	Daily Returns

Inspire Medical Systems  vs.  Axonics Modulation Technologie

Inspire Medical Systems

Risk-Adjusted Performance

0 of 100

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 relatively invariable basic indicators, Inspire Medical is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Axonics Modulation

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Axonics Modulation Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Axonics Modulation is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Inspire Medical and Axonics Modulation

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

The idea behind Inspire Medical Systems and Axonics Modulation Technologies 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.