Correlation Between Stryker and Edwards Lifesciences
Can any of the company-specific risk be diversified away by investing in both Stryker 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 Stryker and Edwards Lifesciences into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stryker and Edwards Lifesciences, you can compare the effects of market volatilities on Stryker 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 Stryker with a short position of Edwards Lifesciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stryker and Edwards Lifesciences.
Diversification Opportunities for Stryker and Edwards Lifesciences
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Stryker and Edwards is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Stryker and Edwards Lifesciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edwards Lifesciences and Stryker 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 Stryker 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 Stryker i.e., Stryker and Edwards Lifesciences go up and down completely randomly.
Pair Corralation between Stryker and Edwards Lifesciences
Assuming the 90 days horizon Stryker is expected to under-perform the Edwards Lifesciences. But the stock apears to be less risky and, when comparing its historical volatility, Stryker is 1.7 times less risky than Edwards Lifesciences. The stock trades about -0.02 of its potential returns per unit of risk. The Edwards Lifesciences is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 6,530 in Edwards Lifesciences on November 27, 2024 and sell it today you would earn a total of 460.00 from holding Edwards Lifesciences or generate 7.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stryker vs. Edwards Lifesciences
Performance |
| Timeline |
| Stryker |
| Edwards Lifesciences |
Stryker and Edwards Lifesciences Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stryker and Edwards Lifesciences
The main advantage of trading using opposite Stryker and Edwards Lifesciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stryker 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.| Stryker vs. THAI BEVERAGE | Stryker vs. China Resources Beer | Stryker vs. East Africa Metals | Stryker vs. ScanSource |
| Edwards Lifesciences vs. GRUPO CARSO A1 | Edwards Lifesciences vs. Direct Line Insurance | Edwards Lifesciences vs. CREDIT AGRICOLE | Edwards Lifesciences vs. Chiba Bank |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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