Correlation Between BHP Group and INTUITIVE SURGICAL
Can any of the company-specific risk be diversified away by investing in both BHP Group and INTUITIVE SURGICAL 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 BHP Group and INTUITIVE SURGICAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BHP Group Limited and INTUITIVE SURGICAL, you can compare the effects of market volatilities on BHP Group and INTUITIVE SURGICAL 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 BHP Group with a short position of INTUITIVE SURGICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of BHP Group and INTUITIVE SURGICAL.
Diversification Opportunities for BHP Group and INTUITIVE SURGICAL
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between BHP and INTUITIVE is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding BHP Group Limited and INTUITIVE SURGICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTUITIVE SURGICAL and BHP Group 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 BHP Group Limited are associated (or correlated) with INTUITIVE SURGICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTUITIVE SURGICAL has no effect on the direction of BHP Group i.e., BHP Group and INTUITIVE SURGICAL go up and down completely randomly.
Pair Corralation between BHP Group and INTUITIVE SURGICAL
Assuming the 90 days trading horizon BHP Group Limited is expected to under-perform the INTUITIVE SURGICAL. But the stock apears to be less risky and, when comparing its historical volatility, BHP Group Limited is 1.05 times less risky than INTUITIVE SURGICAL. The stock trades about -0.14 of its potential returns per unit of risk. The INTUITIVE SURGICAL is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 47,325 in INTUITIVE SURGICAL on August 29, 2024 and sell it today you would earn a total of 4,375 from holding INTUITIVE SURGICAL or generate 9.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BHP Group Limited vs. INTUITIVE SURGICAL
Performance |
| Timeline |
| BHP Group Limited |
| INTUITIVE SURGICAL |
BHP Group and INTUITIVE SURGICAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BHP Group and INTUITIVE SURGICAL
The main advantage of trading using opposite BHP Group and INTUITIVE SURGICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BHP Group position performs unexpectedly, INTUITIVE SURGICAL 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 INTUITIVE SURGICAL will offset losses from the drop in INTUITIVE SURGICAL's long position.| BHP Group vs. Superior Plus Corp | BHP Group vs. NMI Holdings | BHP Group vs. Origin Agritech | BHP Group vs. SIVERS SEMICONDUCTORS AB |
| INTUITIVE SURGICAL vs. Wizz Air Holdings | INTUITIVE SURGICAL vs. ALTAIR RES INC | INTUITIVE SURGICAL vs. WIZZ AIR HLDGUNSPADR4 | INTUITIVE SURGICAL vs. DIVERSIFIED ROYALTY |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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