Correlation Between Merit Medical and Inspire Medical
Can any of the company-specific risk be diversified away by investing in both Merit Medical and Inspire Medical 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 Merit Medical and Inspire Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merit Medical Systems and Inspire Medical Systems, you can compare the effects of market volatilities on Merit Medical and Inspire Medical 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 Merit Medical with a short position of Inspire Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merit Medical and Inspire Medical.
Diversification Opportunities for Merit Medical and Inspire Medical
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Merit and Inspire is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Merit Medical Systems and Inspire Medical Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inspire Medical Systems and Merit 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 Merit Medical Systems are associated (or correlated) with Inspire Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inspire Medical Systems has no effect on the direction of Merit Medical i.e., Merit Medical and Inspire Medical go up and down completely randomly.
Pair Corralation between Merit Medical and Inspire Medical
Assuming the 90 days trading horizon Merit Medical Systems is expected to generate 0.71 times more return on investment than Inspire Medical. However, Merit Medical Systems is 1.42 times less risky than Inspire Medical. It trades about -0.01 of its potential returns per unit of risk. Inspire Medical Systems is currently generating about -0.03 per unit of risk. If you would invest 7,500 in Merit Medical Systems on August 25, 2025 and sell it today you would lose (250.00) from holding Merit Medical Systems or give up 3.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merit Medical Systems vs. Inspire Medical Systems
Performance |
| Timeline |
| Merit Medical Systems |
| Inspire Medical Systems |
Merit Medical and Inspire Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merit Medical and Inspire Medical
The main advantage of trading using opposite Merit Medical and Inspire Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merit Medical position performs unexpectedly, Inspire Medical 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 Inspire Medical will offset losses from the drop in Inspire Medical's long position.| Merit Medical vs. Preferred Bank | Merit Medical vs. PennyMac Mortgage Investment | Merit Medical vs. MGIC INVESTMENT | Merit Medical vs. Cincinnati Financial Corp |
| Inspire Medical vs. Alliance Data Systems | Inspire Medical vs. Alibaba Health Information | Inspire Medical vs. Stewart Information Services | Inspire Medical vs. DATAGROUP SE |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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