Correlation Between Inari Medical and Align Technology

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

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

Diversification Opportunities for Inari Medical and Align Technology

-0.41

Correlation Coefficient

Inari Medical  Align Technology

Very good diversification

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

Pair Corralation between Inari Medical and Align Technology

Given the investment horizon of 90 days Inari Medical is expected to under-perform the Align Technology. In addition to that, Inari Medical is 1.1 times more volatile than Align Technology. It trades about 0.0 of its total potential returns per unit of risk. Align Technology is currently generating about 0.03 per unit of volatility. If you would invest  19,501  in Align Technology on August 31, 2024 and sell it today you would earn a total of  3,465  from holding Align Technology or generate 17.77% return on investment over 90 days.

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

Inari Medical  vs.  Align Technology

Inari Medical

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Inari Medical are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal basic indicators, Inari Medical demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Align Technology

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Align Technology are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Align Technology is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Inari Medical and Align Technology

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

The idea behind Inari Medical and Align Technology 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.