Correlation Between Inspire Medical and Novocure
Can any of the company-specific risk be diversified away by investing in both Inspire Medical and Novocure 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 Novocure 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 Novocure, you can compare the effects of market volatilities on Inspire Medical and Novocure 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 Novocure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inspire Medical and Novocure.
Diversification Opportunities for Inspire Medical and Novocure
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Inspire and Novocure is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Inspire Medical Systems and Novocure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novocure 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 Novocure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novocure has no effect on the direction of Inspire Medical i.e., Inspire Medical and Novocure go up and down completely randomly.
Pair Corralation between Inspire Medical and Novocure
Given the investment horizon of 90 days Inspire Medical Systems is expected to under-perform the Novocure. But the stock apears to be less risky and, when comparing its historical volatility, Inspire Medical Systems is 1.42 times less risky than Novocure. The stock trades about -0.12 of its potential returns per unit of risk. The Novocure is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 1,877 in Novocure on March 25, 2025 and sell it today you would lose (208.00) from holding Novocure or give up 11.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Inspire Medical Systems vs. Novocure
Performance |
| Timeline |
| Inspire Medical Systems |
| Novocure |
Inspire Medical and Novocure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inspire Medical and Novocure
The main advantage of trading using opposite Inspire Medical and Novocure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inspire Medical position performs unexpectedly, Novocure 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 Novocure will offset losses from the drop in Novocure's long position.| Inspire Medical vs. TransMedics Group | Inspire Medical vs. InMode | Inspire Medical vs. Insulet | Inspire Medical vs. Glaukos Corp |
| Novocure vs. Globus Medical | Novocure vs. Insulet | Novocure vs. Inspire Medical Systems | Novocure vs. TransMedics Group |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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