Correlation Between Allianz SE and INTUITIVE SURGICAL

Can any of the company-specific risk be diversified away by investing in both Allianz SE and INTUITIVE SURGICAL 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 Allianz SE and INTUITIVE SURGICAL into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Allianz SE VNA and INTUITIVE SURGICAL, you can compare the effects of market volatilities on Allianz SE and INTUITIVE SURGICAL 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 Allianz SE with a short position of INTUITIVE SURGICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allianz SE and INTUITIVE SURGICAL.

Diversification Opportunities for Allianz SE and INTUITIVE SURGICAL

-0.06

Correlation Coefficient

Allianz SE  INTUITIVE SURGICAL

Good diversification

The 3 months correlation between Allianz and INTUITIVE is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Allianz SE VNA and INTUITIVE SURGICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTUITIVE SURGICAL and Allianz SE 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 Allianz SE VNA are associated (or correlated) with INTUITIVE SURGICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTUITIVE SURGICAL has no effect on the direction of Allianz SE i.e., Allianz SE and INTUITIVE SURGICAL go up and down completely randomly.

Pair Corralation between Allianz SE and INTUITIVE SURGICAL

Assuming the 90 days trading horizon Allianz SE VNA is expected to generate 0.56 times more return on investment than INTUITIVE SURGICAL. However, Allianz SE VNA is 1.78 times less risky than INTUITIVE SURGICAL. It trades about -0.08 of its potential returns per unit of risk. INTUITIVE SURGICAL is currently generating about -0.08 per unit of risk. If you would invest  30,010  in Allianz SE VNA on October 5, 2024 and sell it today you would lose (330.00) from holding Allianz SE VNA or give up 1.1% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Allianz SE VNA  vs.  INTUITIVE SURGICAL

Allianz SE VNA

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Allianz SE VNA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Allianz SE is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

INTUITIVE SURGICAL

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days INTUITIVE SURGICAL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather fragile technical and fundamental indicators, INTUITIVE SURGICAL exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Allianz SE and INTUITIVE SURGICAL

The main advantage of trading using opposite Allianz SE and INTUITIVE SURGICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allianz SE position performs unexpectedly, INTUITIVE SURGICAL 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 INTUITIVE SURGICAL will offset losses from the drop in INTUITIVE SURGICAL's long position.

The idea behind Allianz SE VNA and INTUITIVE SURGICAL 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 Valuation module to check real value of public entities based on technical and fundamental data.