Correlation Between Insulet and CVRx

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

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

Diversification Opportunities for Insulet and CVRx

0.63

Correlation Coefficient

Insulet  CVRx

Poor diversification

The 3 months correlation between Insulet and CVRx is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Insulet and CVRx Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVRx Inc 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 CVRx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVRx Inc has no effect on the direction of Insulet i.e., Insulet and CVRx go up and down completely randomly.

Pair Corralation between Insulet and CVRx

Given the investment horizon of 90 days Insulet is expected to under-perform the CVRx. But the stock apears to be less risky and, when comparing its historical volatility, Insulet is 1.83 times less risky than CVRx. The stock trades about 0.0 of its potential returns per unit of risk. The CVRx Inc is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  1,277  in CVRx Inc on December 28, 2024 and sell it today you would lose (44.00) from holding CVRx Inc or give up 3.45% of portfolio value over 90 days.

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

Insulet  vs.  CVRx Inc

Insulet

Risk-Adjusted Performance

Very Weak

Over the last 90 days Insulet has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Insulet is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

CVRx Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days CVRx Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, CVRx is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Insulet and CVRx

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

The idea behind Insulet and CVRx Inc 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.