Correlation Between SPORT LISBOA and Edwards Lifesciences

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Can any of the company-specific risk be diversified away by investing in both SPORT LISBOA and Edwards Lifesciences 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 SPORT LISBOA and Edwards Lifesciences into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPORT LISBOA E and Edwards Lifesciences, you can compare the effects of market volatilities on SPORT LISBOA and Edwards Lifesciences 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 SPORT LISBOA with a short position of Edwards Lifesciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPORT LISBOA and Edwards Lifesciences.

Diversification Opportunities for SPORT LISBOA and Edwards Lifesciences

0.11
  Correlation Coefficient

Average diversification

The 3 months correlation between SPORT and Edwards is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding SPORT LISBOA E and Edwards Lifesciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edwards Lifesciences and SPORT LISBOA 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 SPORT LISBOA E are associated (or correlated) with Edwards Lifesciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edwards Lifesciences has no effect on the direction of SPORT LISBOA i.e., SPORT LISBOA and Edwards Lifesciences go up and down completely randomly.

Pair Corralation between SPORT LISBOA and Edwards Lifesciences

Assuming the 90 days horizon SPORT LISBOA E is expected to generate 0.89 times more return on investment than Edwards Lifesciences. However, SPORT LISBOA E is 1.12 times less risky than Edwards Lifesciences. It trades about 0.06 of its potential returns per unit of risk. Edwards Lifesciences is currently generating about -0.03 per unit of risk. If you would invest  277.00  in SPORT LISBOA E on September 3, 2024 and sell it today you would earn a total of  59.00  from holding SPORT LISBOA E or generate 21.3% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

SPORT LISBOA E  vs.  Edwards Lifesciences

 Performance 
       Timeline  
SPORT LISBOA E 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days SPORT LISBOA E has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, SPORT LISBOA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
Edwards Lifesciences 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Edwards Lifesciences are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Edwards Lifesciences may actually be approaching a critical reversion point that can send shares even higher in January 2025.

SPORT LISBOA and Edwards Lifesciences Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SPORT LISBOA and Edwards Lifesciences

The main advantage of trading using opposite SPORT LISBOA and Edwards Lifesciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPORT LISBOA position performs unexpectedly, Edwards Lifesciences 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 Edwards Lifesciences will offset losses from the drop in Edwards Lifesciences' long position.
The idea behind SPORT LISBOA E and Edwards Lifesciences pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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