Correlation Between Orthofix Medical and Inogen

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

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

Diversification Opportunities for Orthofix Medical and Inogen

0.2

Correlation Coefficient

Orthofix Medical  Inogen

Modest diversification

The 3 months correlation between Orthofix and Inogen is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Orthofix Medical and Inogen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inogen Inc and Orthofix 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 Orthofix Medical are associated (or correlated) with Inogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inogen Inc has no effect on the direction of Orthofix Medical i.e., Orthofix Medical and Inogen go up and down completely randomly.

Pair Corralation between Orthofix Medical and Inogen

Given the investment horizon of 90 days Orthofix Medical is expected to generate 0.76 times more return on investment than Inogen. However, Orthofix Medical is 1.31 times less risky than Inogen. It trades about 0.11 of its potential returns per unit of risk. Inogen Inc is currently generating about -0.05 per unit of risk. If you would invest  1,660  in Orthofix Medical on September 4, 2024 and sell it today you would earn a total of  271.00  from holding Orthofix Medical or generate 16.33% return on investment over 90 days.

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

Orthofix Medical  vs.  Inogen Inc

Orthofix Medical

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Orthofix Medical are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady forward indicators, Orthofix Medical showed solid returns over the last few months and may actually be approaching a breakup point.

Inogen Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inogen Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Orthofix Medical and Inogen

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

The idea behind Orthofix Medical and Inogen Inc 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.