Correlation Between Edwards Lifesciences and Penumbra
Can any of the company-specific risk be diversified away by investing in both Edwards Lifesciences and Penumbra 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 Penumbra 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 Penumbra, you can compare the effects of market volatilities on Edwards Lifesciences and Penumbra 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 Penumbra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edwards Lifesciences and Penumbra.
Diversification Opportunities for Edwards Lifesciences and Penumbra
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Edwards and Penumbra is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Edwards Lifesciences Corp and Penumbra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Penumbra 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 Penumbra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Penumbra has no effect on the direction of Edwards Lifesciences i.e., Edwards Lifesciences and Penumbra go up and down completely randomly.
Pair Corralation between Edwards Lifesciences and Penumbra
Allowing for the 90-day total investment horizon Edwards Lifesciences is expected to generate 4.77 times less return on investment than Penumbra. But when comparing it to its historical volatility, Edwards Lifesciences Corp is 1.45 times less risky than Penumbra. It trades about 0.04 of its potential returns per unit of risk. Penumbra is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 20,046 in Penumbra on August 28, 2024 and sell it today you would earn a total of 4,422 from holding Penumbra or generate 22.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Edwards Lifesciences Corp vs. Penumbra
Performance |
| Timeline |
| Edwards Lifesciences Corp |
| Penumbra |
Edwards Lifesciences and Penumbra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Edwards Lifesciences and Penumbra
The main advantage of trading using opposite Edwards Lifesciences and Penumbra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edwards Lifesciences position performs unexpectedly, Penumbra 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 Penumbra will offset losses from the drop in Penumbra's long position.| Edwards Lifesciences vs. Medtronic PLC | Edwards Lifesciences vs. Abbott Laboratories | Edwards Lifesciences vs. Boston Scientific Corp | Edwards Lifesciences vs. Zimmer Biomet Holdings |
| Penumbra vs. Insulet | Penumbra vs. TransMedics Group | Penumbra vs. Masimo | Penumbra vs. Inspire Medical Systems |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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