Correlation Between Edwards Lifesciences and SPORT LISBOA
Can any of the company-specific risk be diversified away by investing in both Edwards Lifesciences and SPORT LISBOA 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 SPORT LISBOA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Edwards Lifesciences and SPORT LISBOA E, you can compare the effects of market volatilities on Edwards Lifesciences and SPORT LISBOA 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 SPORT LISBOA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edwards Lifesciences and SPORT LISBOA.
Diversification Opportunities for Edwards Lifesciences and SPORT LISBOA
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Edwards and SPORT is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Edwards Lifesciences and SPORT LISBOA E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPORT LISBOA E 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 are associated (or correlated) with SPORT LISBOA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPORT LISBOA E has no effect on the direction of Edwards Lifesciences i.e., Edwards Lifesciences and SPORT LISBOA go up and down completely randomly.
Pair Corralation between Edwards Lifesciences and SPORT LISBOA
Assuming the 90 days horizon Edwards Lifesciences is expected to generate 1.2 times less return on investment than SPORT LISBOA. But when comparing it to its historical volatility, Edwards Lifesciences is 1.47 times less risky than SPORT LISBOA. It trades about 0.25 of its potential returns per unit of risk. SPORT LISBOA E is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 307.00 in SPORT LISBOA E on September 1, 2024 and sell it today you would earn a total of 29.00 from holding SPORT LISBOA E or generate 9.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Edwards Lifesciences vs. SPORT LISBOA E
Performance |
| Timeline |
| Edwards Lifesciences |
| SPORT LISBOA E |
Edwards Lifesciences and SPORT LISBOA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Edwards Lifesciences and SPORT LISBOA
The main advantage of trading using opposite Edwards Lifesciences and SPORT LISBOA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edwards Lifesciences position performs unexpectedly, SPORT LISBOA 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 SPORT LISBOA will offset losses from the drop in SPORT LISBOA's long position.| Edwards Lifesciences vs. SPORT LISBOA E | Edwards Lifesciences vs. Columbia Sportswear | Edwards Lifesciences vs. Air Transport Services | Edwards Lifesciences vs. Mitsubishi Gas Chemical |
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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