Correlation Between Inari Medical and Orthopediatrics Corp

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

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

Diversification Opportunities for Inari Medical and Orthopediatrics Corp

-0.18

Correlation Coefficient

Inari Medical  Orthopediatrics Corp

Good diversification

The 3 months correlation between Inari and Orthopediatrics is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Inari Medical and Orthopediatrics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orthopediatrics Corp and Inari Medical 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 Inari Medical are associated (or correlated) with Orthopediatrics Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orthopediatrics Corp has no effect on the direction of Inari Medical i.e., Inari Medical and Orthopediatrics Corp go up and down completely randomly.

Pair Corralation between Inari Medical and Orthopediatrics Corp

Given the investment horizon of 90 days Inari Medical is expected to generate 1.6 times more return on investment than Orthopediatrics Corp. However, Inari Medical is 1.6 times more volatile than Orthopediatrics Corp. It trades about 0.2 of its potential returns per unit of risk. Orthopediatrics Corp is currently generating about 0.02 per unit of risk. If you would invest  4,387  in Inari Medical on October 21, 2024 and sell it today you would earn a total of  3,568  from holding Inari Medical or generate 81.33% return on investment over 90 days.

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

Inari Medical  vs.  Orthopediatrics Corp

Inari Medical

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Inari Medical are ranked lower than 15 (%) 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.

Orthopediatrics Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Orthopediatrics Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with Inari Medical and Orthopediatrics Corp

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

The idea behind Inari Medical and Orthopediatrics Corp 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.