Correlation Between Intuitive Surgical and Carl Zeiss

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

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

Diversification Opportunities for Intuitive Surgical and Carl Zeiss

-0.33

Correlation Coefficient

Intuitive Surgical  Carl Zeiss

Very good diversification

The 3 months correlation between Intuitive and Carl is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Intuitive Surgical and Carl Zeiss Meditec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carl Zeiss Meditec and Intuitive Surgical 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 Intuitive Surgical are associated (or correlated) with Carl Zeiss. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carl Zeiss Meditec has no effect on the direction of Intuitive Surgical i.e., Intuitive Surgical and Carl Zeiss go up and down completely randomly.

Pair Corralation between Intuitive Surgical and Carl Zeiss

Given the investment horizon of 90 days Intuitive Surgical is expected to under-perform the Carl Zeiss. But the stock apears to be less risky and, when comparing its historical volatility, Intuitive Surgical is 1.58 times less risky than Carl Zeiss. The stock trades about -0.02 of its potential returns per unit of risk. The Carl Zeiss Meditec is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  4,810  in Carl Zeiss Meditec on December 29, 2024 and sell it today you would earn a total of  2,063  from holding Carl Zeiss Meditec or generate 42.89% return on investment over 90 days.

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

Intuitive Surgical  vs.  Carl Zeiss Meditec

Intuitive Surgical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Intuitive Surgical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Intuitive Surgical is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Carl Zeiss Meditec

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Carl Zeiss Meditec are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Carl Zeiss reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Intuitive Surgical and Carl Zeiss

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

The idea behind Intuitive Surgical and Carl Zeiss Meditec 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.

Check out your portfolio center.

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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.