Correlation Between Shoprite Holdings and INTUITIVE SURGICAL
Can any of the company-specific risk be diversified away by investing in both Shoprite Holdings and INTUITIVE SURGICAL 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 Shoprite Holdings and INTUITIVE SURGICAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shoprite Holdings Limited and INTUITIVE SURGICAL, you can compare the effects of market volatilities on Shoprite Holdings and INTUITIVE SURGICAL 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 Shoprite Holdings with a short position of INTUITIVE SURGICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shoprite Holdings and INTUITIVE SURGICAL.
Diversification Opportunities for Shoprite Holdings and INTUITIVE SURGICAL
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shoprite and INTUITIVE is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Shoprite Holdings Limited and INTUITIVE SURGICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTUITIVE SURGICAL and Shoprite Holdings 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 Shoprite Holdings Limited are associated (or correlated) with INTUITIVE SURGICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTUITIVE SURGICAL has no effect on the direction of Shoprite Holdings i.e., Shoprite Holdings and INTUITIVE SURGICAL go up and down completely randomly.
Pair Corralation between Shoprite Holdings and INTUITIVE SURGICAL
Assuming the 90 days horizon Shoprite Holdings Limited is expected to generate 2.38 times more return on investment than INTUITIVE SURGICAL. However, Shoprite Holdings is 2.38 times more volatile than INTUITIVE SURGICAL. It trades about 0.11 of its potential returns per unit of risk. INTUITIVE SURGICAL is currently generating about 0.11 per unit of risk. If you would invest 475.00 in Shoprite Holdings Limited on August 29, 2024 and sell it today you would earn a total of 1,095 from holding Shoprite Holdings Limited or generate 230.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shoprite Holdings Limited vs. INTUITIVE SURGICAL
Performance |
| Timeline |
| Shoprite Holdings |
| INTUITIVE SURGICAL |
Shoprite Holdings and INTUITIVE SURGICAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shoprite Holdings and INTUITIVE SURGICAL
The main advantage of trading using opposite Shoprite Holdings and INTUITIVE SURGICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shoprite Holdings position performs unexpectedly, INTUITIVE SURGICAL 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 INTUITIVE SURGICAL will offset losses from the drop in INTUITIVE SURGICAL's long position.| Shoprite Holdings vs. Cal Maine Foods | Shoprite Holdings vs. EVS Broadcast Equipment | Shoprite Holdings vs. Transportadora de Gas | Shoprite Holdings vs. Fukuyama Transporting Co |
| INTUITIVE SURGICAL vs. CARSALESCOM | INTUITIVE SURGICAL vs. Carsales | INTUITIVE SURGICAL vs. CNVISION MEDIA | INTUITIVE SURGICAL vs. CODERE ONLINE LUX |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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