Correlation Between ICU Medical and Intuitive Surgical

Can any of the company-specific risk be diversified away by investing in both ICU Medical and Intuitive Surgical 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 ICU Medical and Intuitive Surgical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ICU Medical and Intuitive Surgical, you can compare the effects of market volatilities on ICU Medical and Intuitive Surgical 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 ICU Medical with a short position of Intuitive Surgical. Check out your portfolio center. Please also check ongoing floating volatility patterns of ICU Medical and Intuitive Surgical.

Diversification Opportunities for ICU Medical and Intuitive Surgical

0.31

Correlation Coefficient

ICU Medical  Intuitive Surgical

Weak diversification

The 3 months correlation between ICU and Intuitive is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding ICU Medical and Intuitive Surgical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intuitive Surgical and ICU Medical 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 ICU Medical are associated (or correlated) with Intuitive Surgical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intuitive Surgical has no effect on the direction of ICU Medical i.e., ICU Medical and Intuitive Surgical go up and down completely randomly.

Pair Corralation between ICU Medical and Intuitive Surgical

Given the investment horizon of 90 days ICU Medical is expected to under-perform the Intuitive Surgical. In addition to that, ICU Medical is 1.11 times more volatile than Intuitive Surgical. It trades about -0.05 of its total potential returns per unit of risk. Intuitive Surgical is currently generating about 0.08 per unit of volatility. If you would invest  54,200  in Intuitive Surgical on November 29, 2024 and sell it today you would earn a total of  3,893  from holding Intuitive Surgical or generate 7.18% return on investment over 90 days.

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

ICU Medical  vs.  Intuitive Surgical

ICU Medical

Risk-Adjusted Performance

Very Weak

Over the last 90 days ICU Medical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, ICU Medical is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Intuitive Surgical

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Intuitive Surgical are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Intuitive Surgical may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with ICU Medical and Intuitive Surgical

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

The idea behind ICU Medical and Intuitive Surgical 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.