Correlation Between Intuitive Surgical and Lake Resources

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Can any of the company-specific risk be diversified away by investing in both Intuitive Surgical and Lake Resources 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 Lake Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intuitive Surgical and Lake Resources NL, you can compare the effects of market volatilities on Intuitive Surgical and Lake Resources 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 Lake Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intuitive Surgical and Lake Resources.

Diversification Opportunities for Intuitive Surgical and Lake Resources

-0.65
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Intuitive and Lake is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Intuitive Surgical and Lake Resources NL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lake Resources NL 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 Lake Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lake Resources NL has no effect on the direction of Intuitive Surgical i.e., Intuitive Surgical and Lake Resources go up and down completely randomly.

Pair Corralation between Intuitive Surgical and Lake Resources

Given the investment horizon of 90 days Intuitive Surgical is expected to generate 0.24 times more return on investment than Lake Resources. However, Intuitive Surgical is 4.09 times less risky than Lake Resources. It trades about 0.2 of its potential returns per unit of risk. Lake Resources NL is currently generating about -0.12 per unit of risk. If you would invest  51,127  in Intuitive Surgical on October 25, 2024 and sell it today you would earn a total of  9,918  from holding Intuitive Surgical or generate 19.4% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Intuitive Surgical  vs.  Lake Resources NL

 Performance 
       Timeline  
Intuitive Surgical 

Risk-Adjusted Performance

15 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Intuitive Surgical are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Intuitive Surgical reported solid returns over the last few months and may actually be approaching a breakup point.
Lake Resources NL 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Lake Resources NL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's forward-looking signals remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Intuitive Surgical and Lake Resources Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Intuitive Surgical and Lake Resources

The main advantage of trading using opposite Intuitive Surgical and Lake Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intuitive Surgical position performs unexpectedly, Lake Resources 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 Lake Resources will offset losses from the drop in Lake Resources' long position.
The idea behind Intuitive Surgical and Lake Resources NL 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.

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