Correlation Between Masimo and Si Bone

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

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

Diversification Opportunities for Masimo and Si Bone

0.69

Correlation Coefficient

Masimo  Si Bone

Poor diversification

The 3 months correlation between Masimo and SIBN is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Masimo and Si Bone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Si Bone 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 Si Bone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Si Bone has no effect on the direction of Masimo i.e., Masimo and Si Bone go up and down completely randomly.

Pair Corralation between Masimo and Si Bone

Given the investment horizon of 90 days Masimo is expected to generate 3.19 times less return on investment than Si Bone. But when comparing it to its historical volatility, Masimo is 1.4 times less risky than Si Bone. It trades about 0.01 of its potential returns per unit of risk. Si Bone is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,371  in Si Bone on December 28, 2024 and sell it today you would earn a total of  33.00  from holding Si Bone or generate 2.41% return on investment over 90 days.

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

Masimo  vs.  Si Bone

Masimo

Risk-Adjusted Performance

Very Weak

Over the last 90 days Masimo has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Masimo is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Si Bone

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Si Bone are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental drivers, Si Bone may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Masimo and Si Bone

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

The idea behind Masimo and Si Bone 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.