Correlation Between Edwards Lifesciences and Stryker

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

Diversification Opportunities for Edwards Lifesciences and Stryker

-0.01

Correlation Coefficient

Edwards Lifesciences  Stryker

Good diversification

The 3 months correlation between Edwards and Stryker is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Edwards Lifesciences Corp and Stryker in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stryker 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 Stryker. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stryker has no effect on the direction of Edwards Lifesciences i.e., Edwards Lifesciences and Stryker go up and down completely randomly.

Pair Corralation between Edwards Lifesciences and Stryker

Allowing for the 90-day total investment horizon Edwards Lifesciences Corp is expected to under-perform the Stryker. In addition to that, Edwards Lifesciences is 1.26 times more volatile than Stryker. It trades about -0.04 of its total potential returns per unit of risk. Stryker is currently generating about 0.02 per unit of volatility. If you would invest  36,142  in Stryker on December 28, 2024 and sell it today you would earn a total of  308.00  from holding Stryker or generate 0.85% 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.  Stryker

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 current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Stryker

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Stryker are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Stryker is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Edwards Lifesciences and Stryker

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

The idea behind Edwards Lifesciences Corp and Stryker 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.