Correlation Between Xtant Medical and Masimo

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

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

Diversification Opportunities for Xtant Medical and Masimo

0.32

Correlation Coefficient

Xtant Medical  Masimo

Weak diversification

The 3 months correlation between Xtant and Masimo is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Xtant Medical Holdings and Masimo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Masimo and Xtant 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 Xtant Medical Holdings 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 Xtant Medical i.e., Xtant Medical and Masimo go up and down completely randomly.

Pair Corralation between Xtant Medical and Masimo

Given the investment horizon of 90 days Xtant Medical Holdings is expected to generate 2.25 times more return on investment than Masimo. However, Xtant Medical is 2.25 times more volatile than Masimo. It trades about 0.05 of its potential returns per unit of risk. Masimo is currently generating about -0.01 per unit of risk. If you would invest  46.00  in Xtant Medical Holdings on December 29, 2024 and sell it today you would earn a total of  3.00  from holding Xtant Medical Holdings or generate 6.52% return on investment over 90 days.

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

Xtant Medical Holdings  vs.  Masimo

Xtant Medical Holdings

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Xtant Medical Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Xtant Medical unveiled solid returns over the last few months and may actually be approaching a breakup point.

Masimo

Risk-Adjusted Performance

Very Weak

Over the last 90 days Masimo has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Masimo is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Xtant Medical and Masimo

The main advantage of trading using opposite Xtant Medical and Masimo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtant 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 Xtant Medical Holdings 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.