Correlation Between Edwards Lifesciences and Novacyt SA
Can any of the company-specific risk be diversified away by investing in both Edwards Lifesciences and Novacyt SA 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 Novacyt SA 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 Novacyt SA, you can compare the effects of market volatilities on Edwards Lifesciences and Novacyt SA 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 Novacyt SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edwards Lifesciences and Novacyt SA.
Diversification Opportunities for Edwards Lifesciences and Novacyt SA
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Edwards and Novacyt is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Edwards Lifesciences Corp and Novacyt SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novacyt SA 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 Novacyt SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novacyt SA has no effect on the direction of Edwards Lifesciences i.e., Edwards Lifesciences and Novacyt SA go up and down completely randomly.
Pair Corralation between Edwards Lifesciences and Novacyt SA
Allowing for the 90-day total investment horizon Edwards Lifesciences is expected to generate 8.42 times less return on investment than Novacyt SA. But when comparing it to its historical volatility, Edwards Lifesciences Corp is 3.18 times less risky than Novacyt SA. It trades about 0.01 of its potential returns per unit of risk. Novacyt SA is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 82.00 in Novacyt SA on September 19, 2024 and sell it today you would lose (12.00) from holding Novacyt SA or give up 14.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Edwards Lifesciences Corp vs. Novacyt SA
Performance |
| Timeline |
| Edwards Lifesciences Corp |
| Novacyt SA |
Edwards Lifesciences and Novacyt SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Edwards Lifesciences and Novacyt SA
The main advantage of trading using opposite Edwards Lifesciences and Novacyt SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edwards Lifesciences position performs unexpectedly, Novacyt SA 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 Novacyt SA will offset losses from the drop in Novacyt SA's long position.| Edwards Lifesciences vs. Avita Medical | Edwards Lifesciences vs. Inogen Inc | Edwards Lifesciences vs. Apyx Medical |
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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