Correlation Between Masimo and Monogram Orthopaedics

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

By analyzing existing cross correlation between Masimo and Monogram Orthopaedics Common, you can compare the effects of market volatilities on Masimo and Monogram Orthopaedics 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 Monogram Orthopaedics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Masimo and Monogram Orthopaedics.

Diversification Opportunities for Masimo and Monogram Orthopaedics

-0.77

Correlation Coefficient

Masimo  Monogram Orthopaedics

Pay attention - limited upside

The 3 months correlation between Masimo and Monogram is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Masimo and Monogram Orthopaedics Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monogram Orthopaedics 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 Monogram Orthopaedics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monogram Orthopaedics has no effect on the direction of Masimo i.e., Masimo and Monogram Orthopaedics go up and down completely randomly.

Pair Corralation between Masimo and Monogram Orthopaedics

Given the investment horizon of 90 days Masimo is expected to generate 0.31 times more return on investment than Monogram Orthopaedics. However, Masimo is 3.2 times less risky than Monogram Orthopaedics. It trades about 0.11 of its potential returns per unit of risk. Monogram Orthopaedics Common is currently generating about 0.02 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.  Monogram Orthopaedics Common

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.

Monogram Orthopaedics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Monogram Orthopaedics Common has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Masimo and Monogram Orthopaedics

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

The idea behind Masimo and Monogram Orthopaedics Common 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.