Correlation Between Insulet and Avanos Medical

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Can any of the company-specific risk be diversified away by investing in both Insulet and Avanos 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 Insulet and Avanos Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Insulet and Avanos Medical, you can compare the effects of market volatilities on Insulet and Avanos 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 Insulet with a short position of Avanos Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insulet and Avanos Medical.

Diversification Opportunities for Insulet and Avanos Medical

-0.77
  Correlation Coefficient

Pay attention - limited upside

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

Pair Corralation between Insulet and Avanos Medical

Given the investment horizon of 90 days Insulet is expected to generate 0.58 times more return on investment than Avanos Medical. However, Insulet is 1.74 times less risky than Avanos Medical. It trades about 0.17 of its potential returns per unit of risk. Avanos Medical is currently generating about -0.11 per unit of risk. If you would invest  23,045  in Insulet on September 12, 2024 and sell it today you would earn a total of  4,434  from holding Insulet or generate 19.24% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Insulet  vs.  Avanos Medical

 Performance 
       Timeline  
Insulet 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Insulet are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Insulet exhibited solid returns over the last few months and may actually be approaching a breakup point.
Avanos Medical 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Avanos Medical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain 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.

Insulet and Avanos Medical Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Insulet and Avanos Medical

The main advantage of trading using opposite Insulet and Avanos Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insulet position performs unexpectedly, Avanos 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 Avanos Medical will offset losses from the drop in Avanos Medical's long position.
The idea behind Insulet and Avanos 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.
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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 CEOs Directory module to screen CEOs from public companies around the world.

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