Correlation Between Intuitive Surgical and Pembina Pipeline

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

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

Diversification Opportunities for Intuitive Surgical and Pembina Pipeline

-0.18

Correlation Coefficient

Intuitive Surgical  Pembina Pipeline

Good diversification

The 3 months correlation between Intuitive and Pembina is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Intuitive Surgical and Pembina Pipeline in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pembina Pipeline 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 Pembina Pipeline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pembina Pipeline has no effect on the direction of Intuitive Surgical i.e., Intuitive Surgical and Pembina Pipeline go up and down completely randomly.

Pair Corralation between Intuitive Surgical and Pembina Pipeline

Given the investment horizon of 90 days Intuitive Surgical is expected to under-perform the Pembina Pipeline. In addition to that, Intuitive Surgical is 11.8 times more volatile than Pembina Pipeline. It trades about -0.06 of its total potential returns per unit of risk. Pembina Pipeline is currently generating about 0.08 per unit of volatility. If you would invest  1,583  in Pembina Pipeline on December 21, 2024 and sell it today you would earn a total of  14.00  from holding Pembina Pipeline or generate 0.88% 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.  Pembina Pipeline

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 latest unfluctuating performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pembina Pipeline

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pembina Pipeline are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Pembina Pipeline is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Intuitive Surgical and Pembina Pipeline

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

The idea behind Intuitive Surgical and Pembina Pipeline 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.