Correlation Between Edwards Lifesciences and GN Store

Can any of the company-specific risk be diversified away by investing in both Edwards Lifesciences and GN Store 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 Edwards Lifesciences and GN Store into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Edwards Lifesciences Corp and GN Store Nord, you can compare the effects of market volatilities on Edwards Lifesciences and GN Store 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 Edwards Lifesciences with a short position of GN Store. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edwards Lifesciences and GN Store.

Diversification Opportunities for Edwards Lifesciences and GN Store

-0.49

Correlation Coefficient

Edwards Lifesciences  GN Store

Very good diversification

The 3 months correlation between Edwards and GNNDY is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Edwards Lifesciences Corp and GN Store Nord in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GN Store Nord and Edwards Lifesciences 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 Edwards Lifesciences Corp are associated (or correlated) with GN Store. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GN Store Nord has no effect on the direction of Edwards Lifesciences i.e., Edwards Lifesciences and GN Store go up and down completely randomly.

Pair Corralation between Edwards Lifesciences and GN Store

Allowing for the 90-day total investment horizon Edwards Lifesciences Corp is expected to generate 1.0 times more return on investment than GN Store. However, Edwards Lifesciences is 1.0 times more volatile than GN Store Nord. It trades about 0.08 of its potential returns per unit of risk. GN Store Nord is currently generating about -0.18 per unit of risk. If you would invest  6,813  in Edwards Lifesciences Corp on September 12, 2024 and sell it today you would earn a total of  526.00  from holding Edwards Lifesciences Corp or generate 7.72% return on investment over 90 days.

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

Edwards Lifesciences Corp  vs.  GN Store Nord

Edwards Lifesciences Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Edwards Lifesciences Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Edwards Lifesciences may actually be approaching a critical reversion point that can send shares even higher in January 2025.

GN Store Nord

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GN Store Nord has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Edwards Lifesciences and GN Store

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

The idea behind Edwards Lifesciences Corp and GN Store Nord 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.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..