Correlation Between Integra LifeSciences and Monogram Orthopaedics

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

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

Diversification Opportunities for Integra LifeSciences and Monogram Orthopaedics

-0.41

Correlation Coefficient

Integra LifeSciences  Monogram Orthopaedics

Very good diversification

The 3 months correlation between Integra and Monogram is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Integra LifeSciences Holdings and Monogram Orthopaedics Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monogram Orthopaedics and Integra LifeSciences 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 Integra LifeSciences Holdings are associated (or correlated) with Monogram Orthopaedics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monogram Orthopaedics has no effect on the direction of Integra LifeSciences i.e., Integra LifeSciences and Monogram Orthopaedics go up and down completely randomly.

Pair Corralation between Integra LifeSciences and Monogram Orthopaedics

Given the investment horizon of 90 days Integra LifeSciences Holdings is expected to generate 1.03 times more return on investment than Monogram Orthopaedics. However, Integra LifeSciences is 1.03 times more volatile than Monogram Orthopaedics Common. It trades about 0.1 of its potential returns per unit of risk. Monogram Orthopaedics Common is currently generating about 0.0 per unit of risk. If you would invest  1,754  in Integra LifeSciences Holdings on September 22, 2024 and sell it today you would earn a total of  426.00  from holding Integra LifeSciences Holdings or generate 24.29% return on investment over 90 days.

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

Integra LifeSciences Holdings  vs.  Monogram Orthopaedics Common

Integra LifeSciences

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Integra LifeSciences Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Integra LifeSciences unveiled solid returns over the last few months and may actually be approaching a breakup point.

Monogram Orthopaedics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Monogram Orthopaedics Common has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Monogram Orthopaedics is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Integra LifeSciences and Monogram Orthopaedics

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

The idea behind Integra LifeSciences Holdings and Monogram Orthopaedics Common 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.