Correlation Between Masimo and Shockwave Medical

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

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

Diversification Opportunities for Masimo and Shockwave Medical

0.0

Correlation Coefficient

Masimo  Shockwave Medical

Pay attention - limited upside

The 3 months correlation between Masimo and Shockwave is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Masimo and Shockwave Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shockwave Medical 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 Shockwave Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shockwave Medical has no effect on the direction of Masimo i.e., Masimo and Shockwave Medical go up and down completely randomly.

Pair Corralation between Masimo and Shockwave Medical

If you would invest  17,314  in Masimo on December 4, 2024 and sell it today you would earn a total of  914.00  from holding Masimo or generate 5.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Masimo  vs.  Shockwave Medical

Masimo

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Masimo are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Masimo may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Shockwave Medical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shockwave Medical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Shockwave Medical is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Masimo and Shockwave Medical

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

The idea behind Masimo and Shockwave 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.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..