Correlation Between ICU Medical and Innovative Eyewear

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

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

Diversification Opportunities for ICU Medical and Innovative Eyewear

0.12

Correlation Coefficient

ICU Medical  Innovative Eyewear

Average diversification

The 3 months correlation between ICU and Innovative is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding ICU Medical and Innovative Eyewear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovative Eyewear and ICU 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 ICU Medical are associated (or correlated) with Innovative Eyewear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovative Eyewear has no effect on the direction of ICU Medical i.e., ICU Medical and Innovative Eyewear go up and down completely randomly.

Pair Corralation between ICU Medical and Innovative Eyewear

Given the investment horizon of 90 days ICU Medical is expected to generate 0.36 times more return on investment than Innovative Eyewear. However, ICU Medical is 2.8 times less risky than Innovative Eyewear. It trades about -0.1 of its potential returns per unit of risk. Innovative Eyewear is currently generating about -0.33 per unit of risk. If you would invest  10,258  in ICU Medical on February 2, 2024 and sell it today you would lose (429.00) from holding ICU Medical or give up 4.18% of portfolio value over 90 days.

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

ICU Medical  vs.  Innovative Eyewear

ICU Medical

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ICU Medical are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, ICU Medical may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Innovative Eyewear

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Innovative Eyewear has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with ICU Medical and Innovative Eyewear

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

The idea behind ICU Medical and Innovative Eyewear 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.