Correlation Between Inspire Medical and CONMED

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

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

Diversification Opportunities for Inspire Medical and CONMED

-0.07

Correlation Coefficient

Inspire Medical  CONMED

Good diversification

The 3 months correlation between Inspire and CONMED is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Inspire Medical Systems and CONMED in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CONMED and Inspire 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 Inspire Medical Systems are associated (or correlated) with CONMED. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CONMED has no effect on the direction of Inspire Medical i.e., Inspire Medical and CONMED go up and down completely randomly.

Pair Corralation between Inspire Medical and CONMED

Given the investment horizon of 90 days Inspire Medical Systems is expected to under-perform the CONMED. In addition to that, Inspire Medical is 1.16 times more volatile than CONMED. It trades about -0.01 of its total potential returns per unit of risk. CONMED is currently generating about 0.05 per unit of volatility. If you would invest  7,114  in CONMED on September 4, 2024 and sell it today you would earn a total of  482.00  from holding CONMED or generate 6.78% return on investment over 90 days.

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

Inspire Medical Systems  vs.  CONMED

Inspire Medical Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inspire Medical Systems has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Inspire Medical is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

CONMED

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CONMED are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak primary indicators, CONMED may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Inspire Medical and CONMED

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

The idea behind Inspire Medical Systems and CONMED 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.