Correlation Between Edwards Lifesciences and Guided Therapeutics
Can any of the company-specific risk be diversified away by investing in both Edwards Lifesciences and Guided Therapeutics 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 Edwards Lifesciences and Guided Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Edwards Lifesciences Corp and Guided Therapeutics, you can compare the effects of market volatilities on Edwards Lifesciences and Guided Therapeutics 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 Edwards Lifesciences with a short position of Guided Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edwards Lifesciences and Guided Therapeutics.
Diversification Opportunities for Edwards Lifesciences and Guided Therapeutics
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Edwards and Guided is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Edwards Lifesciences Corp and Guided Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guided Therapeutics and Edwards Lifesciences 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 Edwards Lifesciences Corp are associated (or correlated) with Guided Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guided Therapeutics has no effect on the direction of Edwards Lifesciences i.e., Edwards Lifesciences and Guided Therapeutics go up and down completely randomly.
Pair Corralation between Edwards Lifesciences and Guided Therapeutics
Allowing for the 90-day total investment horizon Edwards Lifesciences is expected to generate 84.23 times less return on investment than Guided Therapeutics. But when comparing it to its historical volatility, Edwards Lifesciences Corp is 6.47 times less risky than Guided Therapeutics. It trades about 0.0 of its potential returns per unit of risk. Guided Therapeutics is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 26.00 in Guided Therapeutics on November 2, 2024 and sell it today you would lose (14.00) from holding Guided Therapeutics or give up 53.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Edwards Lifesciences Corp vs. Guided Therapeutics
Performance |
| Timeline |
| Edwards Lifesciences Corp |
| Guided Therapeutics |
Edwards Lifesciences and Guided Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Edwards Lifesciences and Guided Therapeutics
The main advantage of trading using opposite Edwards Lifesciences and Guided Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edwards Lifesciences position performs unexpectedly, Guided Therapeutics 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 Guided Therapeutics will offset losses from the drop in Guided Therapeutics' long position.| Edwards Lifesciences vs. Medtronic PLC | Edwards Lifesciences vs. Abbott Laboratories | Edwards Lifesciences vs. Boston Scientific Corp | Edwards Lifesciences vs. Zimmer Biomet Holdings |
| Guided Therapeutics vs. Nephros | Guided Therapeutics vs. Intelgenx Technologs | Guided Therapeutics vs. SANUWAVE Health | Guided Therapeutics vs. Spectrascience New |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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