Correlation Between Edwards Lifesciences and Integra LifeSciences
Can any of the company-specific risk be diversified away by investing in both Edwards Lifesciences and Integra 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 Edwards Lifesciences and Integra LifeSciences 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 Integra LifeSciences Holdings, you can compare the effects of market volatilities on Edwards Lifesciences and Integra 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 Edwards Lifesciences with a short position of Integra LifeSciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edwards Lifesciences and Integra LifeSciences.
Diversification Opportunities for Edwards Lifesciences and Integra LifeSciences
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Edwards and Integra is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Edwards Lifesciences Corp and Integra LifeSciences Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Integra LifeSciences 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 Integra LifeSciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Integra LifeSciences has no effect on the direction of Edwards Lifesciences i.e., Edwards Lifesciences and Integra LifeSciences go up and down completely randomly.
Pair Corralation between Edwards Lifesciences and Integra LifeSciences
Allowing for the 90-day total investment horizon Edwards Lifesciences is expected to generate 2.02 times less return on investment than Integra LifeSciences. But when comparing it to its historical volatility, Edwards Lifesciences Corp is 2.84 times less risky than Integra LifeSciences. It trades about 0.12 of its potential returns per unit of risk. Integra LifeSciences Holdings is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,919 in Integra LifeSciences Holdings on September 22, 2024 and sell it today you would earn a total of 261.00 from holding Integra LifeSciences Holdings or generate 13.6% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Edwards Lifesciences Corp vs. Integra LifeSciences Holdings
Performance |
Timeline |
Edwards Lifesciences Corp |
Integra LifeSciences |
Edwards Lifesciences and Integra LifeSciences Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Edwards Lifesciences and Integra LifeSciences
The main advantage of trading using opposite Edwards Lifesciences and Integra LifeSciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edwards Lifesciences position performs unexpectedly, Integra 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 Integra LifeSciences will offset losses from the drop in Integra LifeSciences' long position.Edwards Lifesciences vs. Medtronic PLC | Edwards Lifesciences vs. Abbott Laboratories | Edwards Lifesciences vs. Boston Scientific Corp | Edwards Lifesciences vs. Zimmer Biomet Holdings |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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