Correlation Between Orthopediatrics Corp and Inari Medical

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

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

Diversification Opportunities for Orthopediatrics Corp and Inari Medical

-0.48

Correlation Coefficient

Orthopediatrics Corp  Inari Medical

Very good diversification

The 3 months correlation between Orthopediatrics and Inari is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Orthopediatrics Corp and Inari Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inari Medical and Orthopediatrics Corp 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 Orthopediatrics Corp are associated (or correlated) with Inari Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inari Medical has no effect on the direction of Orthopediatrics Corp i.e., Orthopediatrics Corp and Inari Medical go up and down completely randomly.

Pair Corralation between Orthopediatrics Corp and Inari Medical

Given the investment horizon of 90 days Orthopediatrics Corp is expected to generate 0.99 times more return on investment than Inari Medical. However, Orthopediatrics Corp is 1.01 times less risky than Inari Medical. It trades about 0.01 of its potential returns per unit of risk. Inari Medical is currently generating about 0.0 per unit of risk. If you would invest  2,539  in Orthopediatrics Corp on October 5, 2024 and sell it today you would lose (204.00) from holding Orthopediatrics Corp or give up 8.03% of portfolio value over 90 days.

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

Orthopediatrics Corp  vs.  Inari Medical

Orthopediatrics Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Inari Medical

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Inari Medical are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal basic indicators, Inari Medical demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Orthopediatrics Corp and Inari Medical

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

The idea behind Orthopediatrics Corp and Inari Medical 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.