Correlation Between INTUITIVE SURGICAL and Legend Holdings
Can any of the company-specific risk be diversified away by investing in both INTUITIVE SURGICAL and Legend Holdings 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 Legend Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INTUITIVE SURGICAL and Legend Holdings, you can compare the effects of market volatilities on INTUITIVE SURGICAL and Legend Holdings 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 Legend Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of INTUITIVE SURGICAL and Legend Holdings.
Diversification Opportunities for INTUITIVE SURGICAL and Legend Holdings
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between INTUITIVE and Legend is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding INTUITIVE SURGICAL and Legend Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legend Holdings 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 Legend Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legend Holdings has no effect on the direction of INTUITIVE SURGICAL i.e., INTUITIVE SURGICAL and Legend Holdings go up and down completely randomly.
Pair Corralation between INTUITIVE SURGICAL and Legend Holdings
Assuming the 90 days trading horizon INTUITIVE SURGICAL is expected to generate 0.49 times more return on investment than Legend Holdings. However, INTUITIVE SURGICAL is 2.06 times less risky than Legend Holdings. It trades about 0.09 of its potential returns per unit of risk. Legend Holdings is currently generating about 0.02 per unit of risk. If you would invest 25,210 in INTUITIVE SURGICAL on August 31, 2024 and sell it today you would earn a total of 25,750 from holding INTUITIVE SURGICAL or generate 102.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
INTUITIVE SURGICAL vs. Legend Holdings
Performance |
| Timeline |
| INTUITIVE SURGICAL |
| Legend Holdings |
INTUITIVE SURGICAL and Legend Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INTUITIVE SURGICAL and Legend Holdings
The main advantage of trading using opposite INTUITIVE SURGICAL and Legend Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INTUITIVE SURGICAL position performs unexpectedly, Legend Holdings 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 Legend Holdings will offset losses from the drop in Legend Holdings' long position.| INTUITIVE SURGICAL vs. Consolidated Communications Holdings | INTUITIVE SURGICAL vs. Virtus Investment Partners | INTUITIVE SURGICAL vs. Gamma Communications plc | INTUITIVE SURGICAL vs. MTI WIRELESS EDGE |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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