Correlation Between Edwards Lifesciences and Laboratory

Can any of the company-specific risk be diversified away by investing in both Edwards Lifesciences and Laboratory 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 Laboratory 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 Laboratory of, you can compare the effects of market volatilities on Edwards Lifesciences and Laboratory 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 Laboratory. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edwards Lifesciences and Laboratory.

Diversification Opportunities for Edwards Lifesciences and Laboratory

-0.19

Correlation Coefficient

Edwards Lifesciences  Laboratory

Good diversification

The 3 months correlation between Edwards and Laboratory is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Edwards Lifesciences Corp and Laboratory of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laboratory 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 Laboratory. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laboratory has no effect on the direction of Edwards Lifesciences i.e., Edwards Lifesciences and Laboratory go up and down completely randomly.

Pair Corralation between Edwards Lifesciences and Laboratory

Allowing for the 90-day total investment horizon Edwards Lifesciences Corp is expected to under-perform the Laboratory. In addition to that, Edwards Lifesciences is 1.49 times more volatile than Laboratory of. It trades about -0.04 of its total potential returns per unit of risk. Laboratory of is currently generating about 0.02 per unit of volatility. If you would invest  22,820  in Laboratory of on December 29, 2024 and sell it today you would earn a total of  182.00  from holding Laboratory of or generate 0.8% return on investment over 90 days.

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

Edwards Lifesciences Corp  vs.  Laboratory of

Edwards Lifesciences Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Edwards Lifesciences Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Edwards Lifesciences is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Laboratory

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Laboratory of are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical indicators, Laboratory is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Edwards Lifesciences and Laboratory

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

The idea behind Edwards Lifesciences Corp and Laboratory of 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 Commodity Directory module to find actively traded commodities issued by global exchanges.