Correlation Between Avita Medical and Iradimed

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

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

Diversification Opportunities for Avita Medical and Iradimed

0.78

Correlation Coefficient

Avita Medical  Iradimed

Poor diversification

The 3 months correlation between Avita and Iradimed is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Avita Medical and Iradimed Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iradimed and Avita 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 Avita Medical are associated (or correlated) with Iradimed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iradimed has no effect on the direction of Avita Medical i.e., Avita Medical and Iradimed go up and down completely randomly.

Pair Corralation between Avita Medical and Iradimed

Given the investment horizon of 90 days Avita Medical is expected to generate 1.92 times more return on investment than Iradimed. However, Avita Medical is 1.92 times more volatile than Iradimed Co. It trades about 0.05 of its potential returns per unit of risk. Iradimed Co is currently generating about 0.07 per unit of risk. If you would invest  660.00  in Avita Medical on September 20, 2024 and sell it today you would earn a total of  496.00  from holding Avita Medical or generate 75.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Avita Medical  vs.  Iradimed Co

Avita Medical

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Avita Medical are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating technical and fundamental indicators, Avita Medical may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Iradimed

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Iradimed Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting primary indicators, Iradimed may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Avita Medical and Iradimed

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

The idea behind Avita Medical and Iradimed Co 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.