Correlation Between Vienna Insurance and Inspire Medical

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

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

Diversification Opportunities for Vienna Insurance and Inspire Medical

0.35

Correlation Coefficient

Vienna Insurance  Inspire Medical

Weak diversification

The 3 months correlation between Vienna and Inspire is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Vienna Insurance Group and Inspire Medical Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inspire Medical Systems and Vienna Insurance 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 Vienna Insurance Group are associated (or correlated) with Inspire Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inspire Medical Systems has no effect on the direction of Vienna Insurance i.e., Vienna Insurance and Inspire Medical go up and down completely randomly.

Pair Corralation between Vienna Insurance and Inspire Medical

Assuming the 90 days trading horizon Vienna Insurance is expected to generate 2.83 times less return on investment than Inspire Medical. But when comparing it to its historical volatility, Vienna Insurance Group is 2.32 times less risky than Inspire Medical. It trades about 0.26 of its potential returns per unit of risk. Inspire Medical Systems is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  17,450  in Inspire Medical Systems on October 11, 2024 and sell it today you would earn a total of  1,875  from holding Inspire Medical Systems or generate 10.74% return on investment over 90 days.

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

Vienna Insurance Group  vs.  Inspire Medical Systems

Vienna Insurance

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vienna Insurance Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Vienna Insurance is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Inspire Medical Systems

Risk-Adjusted Performance

3 of 100

Insignificant

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

Pair Trading with Vienna Insurance and Inspire Medical

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

The idea behind Vienna Insurance Group and Inspire Medical Systems 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.