Correlation Between Masimo and 908 Devices

Can any of the company-specific risk be diversified away by investing in both Masimo and 908 Devices 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 Masimo and 908 Devices into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Masimo and 908 Devices, you can compare the effects of market volatilities on Masimo and 908 Devices 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 Masimo with a short position of 908 Devices. Check out your portfolio center. Please also check ongoing floating volatility patterns of Masimo and 908 Devices.

Diversification Opportunities for Masimo and 908 Devices

-0.75

Correlation Coefficient

Masimo  908 Devices

Pay attention - limited upside

The 3 months correlation between Masimo and 908 is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Masimo and 908 Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 908 Devices and Masimo 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 Masimo are associated (or correlated) with 908 Devices. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 908 Devices has no effect on the direction of Masimo i.e., Masimo and 908 Devices go up and down completely randomly.

Pair Corralation between Masimo and 908 Devices

Given the investment horizon of 90 days Masimo is expected to generate 0.49 times more return on investment than 908 Devices. However, Masimo is 2.02 times less risky than 908 Devices. It trades about 0.11 of its potential returns per unit of risk. 908 Devices is currently generating about -0.07 per unit of risk. If you would invest  9,469  in Masimo on September 14, 2024 and sell it today you would earn a total of  8,121  from holding Masimo or generate 85.76% return on investment over 90 days.

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

Masimo  vs.  908 Devices

Masimo

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Masimo are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Masimo demonstrated solid returns over the last few months and may actually be approaching a breakup point.

908 Devices

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 908 Devices has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Masimo and 908 Devices

The main advantage of trading using opposite Masimo and 908 Devices positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Masimo position performs unexpectedly, 908 Devices 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 908 Devices will offset losses from the drop in 908 Devices' long position.

The idea behind Masimo and 908 Devices 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.