Correlation Between CVRx and Edwards Lifesciences
Can any of the company-specific risk be diversified away by investing in both CVRx and Edwards Lifesciences 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 CVRx and Edwards Lifesciences into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVRx Inc and Edwards Lifesciences Corp, you can compare the effects of market volatilities on CVRx and Edwards Lifesciences 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 CVRx with a short position of Edwards Lifesciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVRx and Edwards Lifesciences.
Diversification Opportunities for CVRx and Edwards Lifesciences
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CVRx and Edwards is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding CVRx Inc and Edwards Lifesciences Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edwards Lifesciences Corp and CVRx 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 CVRx Inc are associated (or correlated) with Edwards Lifesciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edwards Lifesciences Corp has no effect on the direction of CVRx i.e., CVRx and Edwards Lifesciences go up and down completely randomly.
Pair Corralation between CVRx and Edwards Lifesciences
Given the investment horizon of 90 days CVRx Inc is expected to generate 2.5 times more return on investment than Edwards Lifesciences. However, CVRx is 2.5 times more volatile than Edwards Lifesciences Corp. It trades about 0.04 of its potential returns per unit of risk. Edwards Lifesciences Corp is currently generating about 0.01 per unit of risk. If you would invest 1,112 in CVRx Inc on November 19, 2024 and sell it today you would earn a total of 397.00 from holding CVRx Inc or generate 35.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CVRx Inc vs. Edwards Lifesciences Corp
Performance |
| Timeline |
| CVRx Inc |
| Edwards Lifesciences Corp |
CVRx and Edwards Lifesciences Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVRx and Edwards Lifesciences
The main advantage of trading using opposite CVRx and Edwards Lifesciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVRx position performs unexpectedly, Edwards Lifesciences 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 Edwards Lifesciences will offset losses from the drop in Edwards Lifesciences' long position.The idea behind CVRx Inc and Edwards Lifesciences Corp 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.| Edwards Lifesciences vs. Medtronic PLC | Edwards Lifesciences vs. Abbott Laboratories | Edwards Lifesciences vs. Boston Scientific Corp | Edwards Lifesciences vs. Zimmer Biomet Holdings |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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