Correlation Between Masimo and Inari Medical

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

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

Diversification Opportunities for Masimo and Inari Medical

-0.47

Correlation Coefficient

Masimo  Inari Medical

Very good diversification

The 3 months correlation between Masimo and Inari is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Masimo and Inari Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inari Medical and Masimo 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 Masimo are associated (or correlated) with Inari Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inari Medical has no effect on the direction of Masimo i.e., Masimo and Inari Medical go up and down completely randomly.

Pair Corralation between Masimo and Inari Medical

Given the investment horizon of 90 days Masimo is expected to generate 111.76 times less return on investment than Inari Medical. But when comparing it to its historical volatility, Masimo is 1.82 times less risky than Inari Medical. It trades about 0.0 of its potential returns per unit of risk. Inari Medical is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  5,220  in Inari Medical on March 4, 2025 and sell it today you would earn a total of  2,777  from holding Inari Medical or generate 53.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	42.28%
Values	Daily Returns

Masimo  vs.  Inari Medical

Masimo

Risk-Adjusted Performance

Very Weak

Over the last 90 days Masimo has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Inari Medical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Inari Medical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Inari Medical is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Masimo and Inari Medical

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

The idea behind Masimo and Inari Medical 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.