Correlation Between Inspire Medical and CONMED

Can any of the company-specific risk be diversified away by investing in both Inspire Medical and CONMED 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 CONMED 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 CONMED, you can compare the effects of market volatilities on Inspire Medical and CONMED 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 CONMED. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inspire Medical and CONMED.

Diversification Opportunities for Inspire Medical and CONMED

0.62

Correlation Coefficient

Inspire Medical  CONMED

Poor diversification

The 3 months correlation between Inspire and CONMED is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Inspire Medical Systems and CONMED in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CONMED 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 CONMED. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CONMED has no effect on the direction of Inspire Medical i.e., Inspire Medical and CONMED go up and down completely randomly.

Pair Corralation between Inspire Medical and CONMED

Given the investment horizon of 90 days Inspire Medical Systems is expected to generate 1.42 times more return on investment than CONMED. However, Inspire Medical is 1.42 times more volatile than CONMED. It trades about -0.05 of its potential returns per unit of risk. CONMED is currently generating about -0.1 per unit of risk. If you would invest  18,465  in Inspire Medical Systems on December 29, 2024 and sell it today you would lose (2,371) from holding Inspire Medical Systems or give up 12.84% of portfolio value over 90 days.

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

Inspire Medical Systems  vs.  CONMED

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.

CONMED

Risk-Adjusted Performance

Very Weak

Over the last 90 days CONMED has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's primary indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Inspire Medical and CONMED

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

The idea behind Inspire Medical Systems and CONMED 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.