Correlation Between Intuitive Surgical and 26875PAN1

Can any of the company-specific risk be diversified away by investing in both Intuitive Surgical and 26875PAN1 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 26875PAN1 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Intuitive Surgical and EOG RES INC, you can compare the effects of market volatilities on Intuitive Surgical and 26875PAN1 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 26875PAN1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intuitive Surgical and 26875PAN1.

Diversification Opportunities for Intuitive Surgical and 26875PAN1

-0.06

Correlation Coefficient

Intuitive Surgical  26875PAN1

Good diversification

The 3 months correlation between Intuitive and 26875PAN1 is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Intuitive Surgical and EOG RES INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EOG RES INC 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 26875PAN1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EOG RES INC has no effect on the direction of Intuitive Surgical i.e., Intuitive Surgical and 26875PAN1 go up and down completely randomly.

Pair Corralation between Intuitive Surgical and 26875PAN1

Given the investment horizon of 90 days Intuitive Surgical is expected to under-perform the 26875PAN1. In addition to that, Intuitive Surgical is 4.23 times more volatile than EOG RES INC. It trades about -0.02 of its total potential returns per unit of risk. EOG RES INC is currently generating about 0.0 per unit of volatility. If you would invest  8,914  in EOG RES INC on December 25, 2024 and sell it today you would earn a total of  1.00  from holding EOG RES INC or generate 0.01% 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.  EOG RES INC

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.

EOG RES INC

Risk-Adjusted Performance

Very Weak

Over the last 90 days EOG RES INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 26875PAN1 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Intuitive Surgical and 26875PAN1

The main advantage of trading using opposite Intuitive Surgical and 26875PAN1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intuitive Surgical position performs unexpectedly, 26875PAN1 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 26875PAN1 will offset losses from the drop in 26875PAN1's long position.

The idea behind Intuitive Surgical and EOG RES INC 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.