Correlation Between Edwards Lifesciences and Semler Scientific

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

Diversification Opportunities for Edwards Lifesciences and Semler Scientific

0.75

Correlation Coefficient

Edwards Lifesciences  Semler Scientific

Poor diversification

The 3 months correlation between Edwards and Semler is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Edwards Lifesciences Corp and Semler Scientific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Semler Scientific 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 Semler Scientific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Semler Scientific has no effect on the direction of Edwards Lifesciences i.e., Edwards Lifesciences and Semler Scientific go up and down completely randomly.

Pair Corralation between Edwards Lifesciences and Semler Scientific

Allowing for the 90-day total investment horizon Edwards Lifesciences Corp is expected to generate 0.23 times more return on investment than Semler Scientific. However, Edwards Lifesciences Corp is 4.42 times less risky than Semler Scientific. It trades about 0.17 of its potential returns per unit of risk. Semler Scientific is currently generating about -0.01 per unit of risk. If you would invest  7,038  in Edwards Lifesciences Corp on September 22, 2024 and sell it today you would earn a total of  443.00  from holding Edwards Lifesciences Corp or generate 6.29% return on investment over 90 days.

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

Edwards Lifesciences Corp  vs.  Semler Scientific

Edwards Lifesciences Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Edwards Lifesciences Corp are ranked lower than 8 (%) 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.

Semler Scientific

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Semler Scientific are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak essential indicators, Semler Scientific reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Edwards Lifesciences and Semler Scientific

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

The idea behind Edwards Lifesciences Corp and Semler Scientific 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.