Correlation Between Intuitive Surgical and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Intuitive Surgical and Dow Jones 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 Intuitive Surgical and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intuitive Surgical and Dow Jones Industrial, you can compare the effects of market volatilities on Intuitive Surgical and Dow Jones 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 Intuitive Surgical with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intuitive Surgical and Dow Jones.
Diversification Opportunities for Intuitive Surgical and Dow Jones
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Intuitive and Dow is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Intuitive Surgical and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Intuitive Surgical 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 Intuitive Surgical are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Intuitive Surgical i.e., Intuitive Surgical and Dow Jones go up and down completely randomly.
Pair Corralation between Intuitive Surgical and Dow Jones
Given the investment horizon of 90 days Intuitive Surgical is expected to generate 2.24 times more return on investment than Dow Jones. However, Intuitive Surgical is 2.24 times more volatile than Dow Jones Industrial. It trades about 0.12 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.1 per unit of risk. If you would invest 38,560 in Intuitive Surgical on August 27, 2024 and sell it today you would earn a total of 16,227 from holding Intuitive Surgical or generate 42.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Intuitive Surgical vs. Dow Jones Industrial
Performance |
| Timeline |
Intuitive Surgical and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Intuitive Surgical
Pair trading matchups for Intuitive Surgical
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Intuitive Surgical and Dow Jones
The main advantage of trading using opposite Intuitive Surgical and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intuitive Surgical position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Intuitive Surgical vs. Repligen | Intuitive Surgical vs. ResMed Inc | Intuitive Surgical vs. Merit Medical Systems | Intuitive Surgical vs. ICU Medical |
| Dow Jones vs. MI Homes | Dow Jones vs. Franklin Street Properties | Dow Jones vs. Summit Hotel Properties | Dow Jones vs. Portillos |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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