Correlation Between Inspire Medical and Electrocore LLC

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

Diversification Opportunities for Inspire Medical and Electrocore LLC

0.75

Correlation Coefficient

Inspire Medical  Electrocore LLC

Poor diversification

The 3 months correlation between Inspire and Electrocore is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Inspire Medical Systems and Electrocore LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electrocore LLC 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 Electrocore LLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electrocore LLC has no effect on the direction of Inspire Medical i.e., Inspire Medical and Electrocore LLC go up and down completely randomly.

Pair Corralation between Inspire Medical and Electrocore LLC

Given the investment horizon of 90 days Inspire Medical Systems is expected to generate 0.66 times more return on investment than Electrocore LLC. However, Inspire Medical Systems is 1.51 times less risky than Electrocore LLC. It trades about -0.06 of its potential returns per unit of risk. Electrocore LLC is currently generating about -0.28 per unit of risk. If you would invest  18,465  in Inspire Medical Systems on December 30, 2024 and sell it today you would lose (2,741) from holding Inspire Medical Systems or give up 14.84% 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.  Electrocore LLC

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 weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Electrocore LLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Electrocore LLC has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Inspire Medical and Electrocore LLC

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

The idea behind Inspire Medical Systems and Electrocore LLC 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.