Correlation Between Inspire Medical and Integra LifeSciences

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

Diversification Opportunities for Inspire Medical and Integra LifeSciences

0.29

Correlation Coefficient

Inspire Medical  Integra LifeSciences

Modest diversification

The 3 months correlation between Inspire and Integra is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Inspire Medical Systems and Integra LifeSciences Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Integra LifeSciences 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 Integra LifeSciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Integra LifeSciences has no effect on the direction of Inspire Medical i.e., Inspire Medical and Integra LifeSciences go up and down completely randomly.

Pair Corralation between Inspire Medical and Integra LifeSciences

Given the investment horizon of 90 days Inspire Medical Systems is expected to under-perform the Integra LifeSciences. In addition to that, Inspire Medical is 1.08 times more volatile than Integra LifeSciences Holdings. It trades about -0.05 of its total potential returns per unit of risk. Integra LifeSciences Holdings is currently generating about 0.0 per unit of volatility. If you would invest  2,247  in Integra LifeSciences Holdings on December 29, 2024 and sell it today you would lose (46.00) from holding Integra LifeSciences Holdings or give up 2.05% of portfolio value over 90 days.

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

Inspire Medical Systems  vs.  Integra LifeSciences Holdings

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.

Integra LifeSciences

Risk-Adjusted Performance

Very Weak

Over the last 90 days Integra LifeSciences Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Integra LifeSciences is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Inspire Medical and Integra LifeSciences

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

The idea behind Inspire Medical Systems and Integra LifeSciences Holdings 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.