Correlation Between Edwards Lifesciences and Insulet
Can any of the company-specific risk be diversified away by investing in both Edwards Lifesciences and Insulet 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 Insulet 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 Insulet, you can compare the effects of market volatilities on Edwards Lifesciences and Insulet 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 Insulet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edwards Lifesciences and Insulet.
Diversification Opportunities for Edwards Lifesciences and Insulet
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Edwards and Insulet is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Edwards Lifesciences Corp and Insulet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insulet 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 Insulet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insulet has no effect on the direction of Edwards Lifesciences i.e., Edwards Lifesciences and Insulet go up and down completely randomly.
Pair Corralation between Edwards Lifesciences and Insulet
Allowing for the 90-day total investment horizon Edwards Lifesciences Corp is expected to generate 0.9 times more return on investment than Insulet. However, Edwards Lifesciences Corp is 1.11 times less risky than Insulet. It trades about 0.0 of its potential returns per unit of risk. Insulet is currently generating about -0.01 per unit of risk. If you would invest 8,217 in Edwards Lifesciences Corp on August 24, 2024 and sell it today you would lose (1,169) from holding Edwards Lifesciences Corp or give up 14.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Edwards Lifesciences Corp vs. Insulet
Performance |
| Timeline |
| Edwards Lifesciences Corp |
| Insulet |
Edwards Lifesciences and Insulet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Edwards Lifesciences and Insulet
The main advantage of trading using opposite Edwards Lifesciences and Insulet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edwards Lifesciences position performs unexpectedly, Insulet 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 Insulet will offset losses from the drop in Insulet'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 |
| Insulet vs. DexCom Inc | Insulet vs. Integra LifeSciences Holdings | Insulet vs. Senseonics Holdings | Insulet vs. Edwards Lifesciences Corp |
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 CEOs Directory module to screen CEOs from public companies around the world.
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