Correlation Between CARSALES and Inspire Medical
Can any of the company-specific risk be diversified away by investing in both CARSALES 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 CARSALES and Inspire Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CARSALESCOM and Inspire Medical Systems, you can compare the effects of market volatilities on CARSALES 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 CARSALES with a short position of Inspire Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of CARSALES and Inspire Medical.
Diversification Opportunities for CARSALES and Inspire Medical
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CARSALES and Inspire is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding CARSALESCOM 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 CARSALES 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 CARSALESCOM 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 CARSALES i.e., CARSALES and Inspire Medical go up and down completely randomly.
Pair Corralation between CARSALES and Inspire Medical
Assuming the 90 days trading horizon CARSALESCOM is expected to under-perform the Inspire Medical. But the stock apears to be less risky and, when comparing its historical volatility, CARSALESCOM is 3.45 times less risky than Inspire Medical. The stock trades about -0.13 of its potential returns per unit of risk. The Inspire Medical Systems is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 7,882 in Inspire Medical Systems on September 1, 2025 and sell it today you would earn a total of 2,778 from holding Inspire Medical Systems or generate 35.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CARSALESCOM vs. Inspire Medical Systems
Performance |
| Timeline |
| CARSALESCOM |
| Inspire Medical Systems |
CARSALES and Inspire Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CARSALES and Inspire Medical
The main advantage of trading using opposite CARSALES and Inspire Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CARSALES 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.The idea behind CARSALESCOM and Inspire Medical Systems 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.| Inspire Medical vs. CARSALESCOM | Inspire Medical vs. Information Services International Dentsu | Inspire Medical vs. Teradata Corp | Inspire Medical vs. INTER CARS SA |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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