Correlation Between INTUITIVE SURGICAL and IMPERIAL TOBACCO
Can any of the company-specific risk be diversified away by investing in both INTUITIVE SURGICAL and IMPERIAL TOBACCO 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 IMPERIAL TOBACCO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INTUITIVE SURGICAL and IMPERIAL TOBACCO , you can compare the effects of market volatilities on INTUITIVE SURGICAL and IMPERIAL TOBACCO 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 IMPERIAL TOBACCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of INTUITIVE SURGICAL and IMPERIAL TOBACCO.
Diversification Opportunities for INTUITIVE SURGICAL and IMPERIAL TOBACCO
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between INTUITIVE and IMPERIAL is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding INTUITIVE SURGICAL and IMPERIAL TOBACCO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IMPERIAL TOBACCO 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 IMPERIAL TOBACCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IMPERIAL TOBACCO has no effect on the direction of INTUITIVE SURGICAL i.e., INTUITIVE SURGICAL and IMPERIAL TOBACCO go up and down completely randomly.
Pair Corralation between INTUITIVE SURGICAL and IMPERIAL TOBACCO
Assuming the 90 days trading horizon INTUITIVE SURGICAL is expected to generate 1.58 times more return on investment than IMPERIAL TOBACCO. However, INTUITIVE SURGICAL is 1.58 times more volatile than IMPERIAL TOBACCO . It trades about 0.11 of its potential returns per unit of risk. IMPERIAL TOBACCO is currently generating about 0.08 per unit of risk. If you would invest 23,650 in INTUITIVE SURGICAL on August 27, 2024 and sell it today you would earn a total of 29,730 from holding INTUITIVE SURGICAL or generate 125.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
INTUITIVE SURGICAL vs. IMPERIAL TOBACCO
Performance |
| Timeline |
| INTUITIVE SURGICAL |
| IMPERIAL TOBACCO |
INTUITIVE SURGICAL and IMPERIAL TOBACCO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INTUITIVE SURGICAL and IMPERIAL TOBACCO
The main advantage of trading using opposite INTUITIVE SURGICAL and IMPERIAL TOBACCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INTUITIVE SURGICAL position performs unexpectedly, IMPERIAL TOBACCO 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 IMPERIAL TOBACCO will offset losses from the drop in IMPERIAL TOBACCO's long position.| INTUITIVE SURGICAL vs. PENN NATL GAMING | INTUITIVE SURGICAL vs. GAMING FAC SA | INTUITIVE SURGICAL vs. Xinhua Winshare Publishing | INTUITIVE SURGICAL vs. TSOGO SUN GAMING |
| IMPERIAL TOBACCO vs. Pure Storage | IMPERIAL TOBACCO vs. Stewart Information Services | IMPERIAL TOBACCO vs. CVS Health | IMPERIAL TOBACCO vs. National Health Investors |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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