Correlation Between Insulet and Icecure Medical

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

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

Diversification Opportunities for Insulet and Icecure Medical

0.19

Correlation Coefficient

Insulet  Icecure Medical

Average diversification

The 3 months correlation between Insulet and Icecure is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Insulet and Icecure Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icecure 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 Icecure Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icecure Medical has no effect on the direction of Insulet i.e., Insulet and Icecure Medical go up and down completely randomly.

Pair Corralation between Insulet and Icecure Medical

Given the investment horizon of 90 days Insulet is expected to generate 0.53 times more return on investment than Icecure Medical. However, Insulet is 1.89 times less risky than Icecure Medical. It trades about 0.07 of its potential returns per unit of risk. Icecure Medical is currently generating about 0.0 per unit of risk. If you would invest  19,518  in Insulet on September 4, 2024 and sell it today you would earn a total of  7,448  from holding Insulet or generate 38.16% return on investment over 90 days.

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

Insulet  vs.  Icecure Medical

Insulet

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Insulet are ranked lower than 17 (%) 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.

Icecure Medical

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Icecure Medical are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile fundamental indicators, Icecure Medical displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Insulet and Icecure Medical

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

The idea behind Insulet and Icecure 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.