Correlation Between Si Bone and Masimo

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

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

Diversification Opportunities for Si Bone and Masimo

0.51

Correlation Coefficient

Si Bone  Masimo

Very weak diversification

The 3 months correlation between SIBN and Masimo is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Si Bone and Masimo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Masimo and Si Bone 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 Si Bone are associated (or correlated) with Masimo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Masimo has no effect on the direction of Si Bone i.e., Si Bone and Masimo go up and down completely randomly.

Pair Corralation between Si Bone and Masimo

Given the investment horizon of 90 days Si Bone is expected to generate 1.59 times more return on investment than Masimo. However, Si Bone is 1.59 times more volatile than Masimo. It trades about 0.15 of its potential returns per unit of risk. Masimo is currently generating about 0.08 per unit of risk. If you would invest  1,356  in Si Bone on November 29, 2024 and sell it today you would earn a total of  459.00  from holding Si Bone or generate 33.85% return on investment over 90 days.

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

Si Bone  vs.  Masimo

Si Bone

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Si Bone are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental drivers, Si Bone displayed solid returns over the last few months and may actually be approaching a breakup point.

Masimo

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Masimo are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Masimo may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Si Bone and Masimo

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

The idea behind Si Bone and Masimo 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..