Correlation Between Iradimed and Anika Therapeutics

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

By analyzing existing cross correlation between Iradimed Co and Anika Therapeutics, you can compare the effects of market volatilities on Iradimed and Anika Therapeutics 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 Iradimed with a short position of Anika Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iradimed and Anika Therapeutics.

Diversification Opportunities for Iradimed and Anika Therapeutics

-0.68

Correlation Coefficient

Iradimed  Anika Therapeutics

Excellent diversification

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

Pair Corralation between Iradimed and Anika Therapeutics

Given the investment horizon of 90 days Iradimed Co is expected to generate 0.51 times more return on investment than Anika Therapeutics. However, Iradimed Co is 1.97 times less risky than Anika Therapeutics. It trades about 0.13 of its potential returns per unit of risk. Anika Therapeutics is currently generating about -0.1 per unit of risk. If you would invest  4,569  in Iradimed Co on September 2, 2024 and sell it today you would earn a total of  824.00  from holding Iradimed Co or generate 18.03% return on investment over 90 days.

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

Iradimed Co  vs.  Anika Therapeutics

Iradimed

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Iradimed Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile primary indicators, Iradimed exhibited solid returns over the last few months and may actually be approaching a breakup point.

Anika Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Anika Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's forward indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Iradimed and Anika Therapeutics

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

The idea behind Iradimed Co and Anika Therapeutics 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.