Correlation Between Integra LifeSciences and Edwards Lifesciences

Can any of the company-specific risk be diversified away by investing in both Integra LifeSciences and Edwards 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 Integra LifeSciences and Edwards Lifesciences into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Integra LifeSciences Holdings and Edwards Lifesciences Corp, you can compare the effects of market volatilities on Integra LifeSciences and Edwards 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 Integra LifeSciences with a short position of Edwards Lifesciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Integra LifeSciences and Edwards Lifesciences.

Diversification Opportunities for Integra LifeSciences and Edwards Lifesciences

0.4

Correlation Coefficient

Integra LifeSciences  Edwards Lifesciences

Very weak diversification

The 3 months correlation between Integra and Edwards is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Integra LifeSciences Holdings and Edwards Lifesciences Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edwards Lifesciences Corp and Integra 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 Integra LifeSciences Holdings are associated (or correlated) with Edwards Lifesciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edwards Lifesciences Corp has no effect on the direction of Integra LifeSciences i.e., Integra LifeSciences and Edwards Lifesciences go up and down completely randomly.

Pair Corralation between Integra LifeSciences and Edwards Lifesciences

Given the investment horizon of 90 days Integra LifeSciences Holdings is expected to under-perform the Edwards Lifesciences. In addition to that, Integra LifeSciences is 1.13 times more volatile than Edwards Lifesciences Corp. It trades about -0.04 of its total potential returns per unit of risk. Edwards Lifesciences Corp is currently generating about -0.03 per unit of volatility. If you would invest  9,108  in Edwards Lifesciences Corp on October 1, 2024 and sell it today you would lose (1,543) from holding Edwards Lifesciences Corp or give up 16.94% of portfolio value over 90 days.

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

Integra LifeSciences Holdings  vs.  Edwards Lifesciences Corp

Integra LifeSciences

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Integra LifeSciences Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Integra LifeSciences unveiled solid returns over the last few months and may actually be approaching a breakup point.

Edwards Lifesciences Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Edwards Lifesciences Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Edwards Lifesciences showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Integra LifeSciences and Edwards Lifesciences

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

The idea behind Integra LifeSciences Holdings and Edwards Lifesciences Corp 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.