Correlation Between Intuitive Surgical and Utah Medical

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

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

Diversification Opportunities for Intuitive Surgical and Utah Medical

0.4

Correlation Coefficient

Intuitive Surgical  Utah Medical

Very weak diversification

The 3 months correlation between Intuitive and Utah is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Intuitive Surgical and Utah Medical Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Utah Medical Products 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 Utah Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Utah Medical Products has no effect on the direction of Intuitive Surgical i.e., Intuitive Surgical and Utah Medical go up and down completely randomly.

Pair Corralation between Intuitive Surgical and Utah Medical

Given the investment horizon of 90 days Intuitive Surgical is expected to under-perform the Utah Medical. In addition to that, Intuitive Surgical is 2.4 times more volatile than Utah Medical Products. It trades about -0.04 of its total potential returns per unit of risk. Utah Medical Products is currently generating about -0.06 per unit of volatility. If you would invest  6,069  in Utah Medical Products on December 20, 2024 and sell it today you would lose (225.00) from holding Utah Medical Products or give up 3.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Intuitive Surgical  vs.  Utah Medical Products

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.

Utah Medical Products

Risk-Adjusted Performance

Very Weak

Over the last 90 days Utah Medical Products has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, Utah Medical is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Intuitive Surgical and Utah Medical

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

The idea behind Intuitive Surgical and Utah Medical Products 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.