Correlation Between Shockwave Medical and Masimo

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

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

Diversification Opportunities for Shockwave Medical and Masimo

-0.13

Correlation Coefficient

Shockwave Medical  Masimo

Good diversification

The 3 months correlation between Shockwave and Masimo is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Shockwave Medical and Masimo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Masimo and Shockwave 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 Shockwave Medical 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 Shockwave Medical i.e., Shockwave Medical and Masimo go up and down completely randomly.

Pair Corralation between Shockwave Medical and Masimo

If you would invest  11,397  in Masimo on September 14, 2024 and sell it today you would earn a total of  6,193  from holding Masimo or generate 54.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

Shockwave Medical  vs.  Masimo

Shockwave Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shockwave Medical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Shockwave Medical is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Masimo

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Masimo are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Masimo demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shockwave Medical and Masimo

The main advantage of trading using opposite Shockwave Medical and Masimo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shockwave Medical 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 Shockwave Medical 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.