Correlation Between Intuitive Surgical and Transocean

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

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

Diversification Opportunities for Intuitive Surgical and Transocean

-0.22

Correlation Coefficient

Intuitive Surgical  Transocean

Very good diversification

The 3 months correlation between Intuitive and Transocean is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Intuitive Surgical and Transocean in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transocean 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 Transocean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transocean has no effect on the direction of Intuitive Surgical i.e., Intuitive Surgical and Transocean go up and down completely randomly.

Pair Corralation between Intuitive Surgical and Transocean

Given the investment horizon of 90 days Intuitive Surgical is expected to generate 0.52 times more return on investment than Transocean. However, Intuitive Surgical is 1.93 times less risky than Transocean. It trades about 0.04 of its potential returns per unit of risk. Transocean is currently generating about 0.02 per unit of risk. If you would invest  53,809  in Intuitive Surgical on October 11, 2024 and sell it today you would earn a total of  593.00  from holding Intuitive Surgical or generate 1.1% 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.  Transocean

Intuitive Surgical

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Intuitive Surgical are ranked lower than 9 (%) 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.

Transocean

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Intuitive Surgical and Transocean

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

The idea behind Intuitive Surgical and Transocean 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.