Correlation Between Si Bone and Insulet

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

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

Diversification Opportunities for Si Bone and Insulet

0.55

Correlation Coefficient

Si Bone  Insulet

Very weak diversification

The 3 months correlation between SIBN and Insulet is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Si Bone and Insulet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insulet 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 Insulet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insulet has no effect on the direction of Si Bone i.e., Si Bone and Insulet go up and down completely randomly.

Pair Corralation between Si Bone and Insulet

Given the investment horizon of 90 days Si Bone is expected to generate 1.87 times more return on investment than Insulet. However, Si Bone is 1.87 times more volatile than Insulet. It trades about 0.03 of its potential returns per unit of risk. Insulet is currently generating about 0.0 per unit of risk. If you would invest  1,371  in Si Bone on December 28, 2024 and sell it today you would earn a total of  33.00  from holding Si Bone or generate 2.41% 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.  Insulet

Si Bone

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Si Bone are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental drivers, Si Bone may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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.

Pair Trading with Si Bone and Insulet

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

The idea behind Si Bone and Insulet 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.