Correlation Between Edwards Lifesciences and Venus Concept

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

Diversification Opportunities for Edwards Lifesciences and Venus Concept

-0.35

Correlation Coefficient

Edwards Lifesciences  Venus Concept

Very good diversification

The 3 months correlation between Edwards and Venus is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Edwards Lifesciences Corp and Venus Concept in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Venus Concept 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 Venus Concept. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Venus Concept has no effect on the direction of Edwards Lifesciences i.e., Edwards Lifesciences and Venus Concept go up and down completely randomly.

Pair Corralation between Edwards Lifesciences and Venus Concept

Allowing for the 90-day total investment horizon Edwards Lifesciences Corp is expected to generate 0.13 times more return on investment than Venus Concept. However, Edwards Lifesciences Corp is 7.83 times less risky than Venus Concept. It trades about 0.04 of its potential returns per unit of risk. Venus Concept is currently generating about -0.01 per unit of risk. If you would invest  6,875  in Edwards Lifesciences Corp on September 3, 2024 and sell it today you would earn a total of  260.00  from holding Edwards Lifesciences Corp or generate 3.78% 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.  Venus Concept

Edwards Lifesciences Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Edwards Lifesciences Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Edwards Lifesciences is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Venus Concept

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Venus Concept has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Edwards Lifesciences and Venus Concept

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

The idea behind Edwards Lifesciences Corp and Venus Concept 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.