Correlation Between Intuitive Surgical and Predictive Oncology

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

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

Diversification Opportunities for Intuitive Surgical and Predictive Oncology

0.47

Correlation Coefficient

Intuitive Surgical  Predictive Oncology

Very weak diversification

The 3 months correlation between Intuitive and Predictive is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Intuitive Surgical and Predictive Oncology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Predictive Oncology 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 Predictive Oncology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Predictive Oncology has no effect on the direction of Intuitive Surgical i.e., Intuitive Surgical and Predictive Oncology go up and down completely randomly.

Pair Corralation between Intuitive Surgical and Predictive Oncology

Given the investment horizon of 90 days Intuitive Surgical is expected to under-perform the Predictive Oncology. But the stock apears to be less risky and, when comparing its historical volatility, Intuitive Surgical is 5.69 times less risky than Predictive Oncology. The stock trades about -0.04 of its potential returns per unit of risk. The Predictive Oncology is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  90.00  in Predictive Oncology on December 30, 2024 and sell it today you would earn a total of  55.00  from holding Predictive Oncology or generate 61.11% return on investment over 90 days.

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

Intuitive Surgical  vs.  Predictive Oncology

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.

Predictive Oncology

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Predictive Oncology are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting basic indicators, Predictive Oncology demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Intuitive Surgical and Predictive Oncology

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

The idea behind Intuitive Surgical and Predictive Oncology 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.