Correlation Between Inventiva and Inspire Medical

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

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

Diversification Opportunities for Inventiva and Inspire Medical

-0.52

Correlation Coefficient

Inventiva  Inspire Medical

Excellent diversification

The 3 months correlation between Inventiva and Inspire is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Inventiva Sa and Inspire Medical Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inspire Medical Systems and Inventiva 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 Inventiva Sa are associated (or correlated) with Inspire Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inspire Medical Systems has no effect on the direction of Inventiva i.e., Inventiva and Inspire Medical go up and down completely randomly.

Pair Corralation between Inventiva and Inspire Medical

Considering the 90-day investment horizon Inventiva Sa is expected to generate 1.25 times more return on investment than Inspire Medical. However, Inventiva is 1.25 times more volatile than Inspire Medical Systems. It trades about 0.13 of its potential returns per unit of risk. Inspire Medical Systems is currently generating about -0.06 per unit of risk. If you would invest  227.00  in Inventiva Sa on December 29, 2024 and sell it today you would earn a total of  77.00  from holding Inventiva Sa or generate 33.92% return on investment over 90 days.

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

Inventiva Sa  vs.  Inspire Medical Systems

Inventiva Sa

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Inventiva Sa are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Inventiva sustained solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Inventiva and Inspire Medical

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

The idea behind Inventiva Sa and Inspire Medical Systems 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.