Correlation Between Inspire Medical and PURETECH HEALTH

Can any of the company-specific risk be diversified away by investing in both Inspire Medical and PURETECH HEALTH 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 PURETECH HEALTH 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 PURETECH HEALTH PLC, you can compare the effects of market volatilities on Inspire Medical and PURETECH HEALTH 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 PURETECH HEALTH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inspire Medical and PURETECH HEALTH.

Diversification Opportunities for Inspire Medical and PURETECH HEALTH

-0.16

Correlation Coefficient

Inspire Medical  PURETECH HEALTH

Good diversification

The 3 months correlation between Inspire and PURETECH is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Inspire Medical Systems and PURETECH HEALTH PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PURETECH HEALTH PLC 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 PURETECH HEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PURETECH HEALTH PLC has no effect on the direction of Inspire Medical i.e., Inspire Medical and PURETECH HEALTH go up and down completely randomly.

Pair Corralation between Inspire Medical and PURETECH HEALTH

Assuming the 90 days horizon Inspire Medical Systems is expected to under-perform the PURETECH HEALTH. In addition to that, Inspire Medical is 1.06 times more volatile than PURETECH HEALTH PLC. It trades about -0.12 of its total potential returns per unit of risk. PURETECH HEALTH PLC is currently generating about 0.07 per unit of volatility. If you would invest  145.00  in PURETECH HEALTH PLC on April 24, 2025 and sell it today you would earn a total of  12.00  from holding PURETECH HEALTH PLC or generate 8.28% return on investment over 90 days.

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

Inspire Medical Systems  vs.  PURETECH HEALTH PLC

Inspire Medical Systems

Risk-Adjusted Performance

Very Weak

Over the last 90 days Inspire Medical Systems has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in August 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

PURETECH HEALTH PLC

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PURETECH HEALTH PLC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, PURETECH HEALTH may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Inspire Medical and PURETECH HEALTH

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

The idea behind Inspire Medical Systems and PURETECH HEALTH PLC 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.