Correlation Between Si Bone and Inari Medical

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

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

Diversification Opportunities for Si Bone and Inari Medical

0.22

Correlation Coefficient

Si Bone  Inari Medical

Modest diversification

The 3 months correlation between SIBN and Inari is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Si Bone and Inari Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inari Medical 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 Inari Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inari Medical has no effect on the direction of Si Bone i.e., Si Bone and Inari Medical go up and down completely randomly.

Pair Corralation between Si Bone and Inari Medical

Given the investment horizon of 90 days Si Bone is expected to under-perform the Inari Medical. But the stock apears to be less risky and, when comparing its historical volatility, Si Bone is 1.05 times less risky than Inari Medical. The stock trades about -0.01 of its potential returns per unit of risk. The Inari Medical is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  5,933  in Inari Medical on October 5, 2024 and sell it today you would lose (956.00) from holding Inari Medical or give up 16.11% of portfolio value over 90 days.

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

Si Bone  vs.  Inari Medical

Si Bone

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Si Bone are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady fundamental drivers, Si Bone may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Inari Medical

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Inari Medical are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal basic indicators, Inari Medical demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Si Bone and Inari Medical

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

The idea behind Si Bone and Inari 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.