Correlation Between INTUITIVE SURGICAL and Lord Abbett

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

By analyzing existing cross correlation between INTUITIVE SURGICAL and Lord Abbett Short, you can compare the effects of market volatilities on INTUITIVE SURGICAL and Lord Abbett 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 Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of INTUITIVE SURGICAL and Lord Abbett.

Diversification Opportunities for INTUITIVE SURGICAL and Lord Abbett

0.87

Correlation Coefficient

INTUITIVE SURGICAL  Lord Abbett

Very poor diversification

The 3 months correlation between INTUITIVE and Lord is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding INTUITIVE SURGICAL and Lord Abbett Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Short 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 Lord Abbett. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lord Abbett Short has no effect on the direction of INTUITIVE SURGICAL i.e., INTUITIVE SURGICAL and Lord Abbett go up and down completely randomly.

Pair Corralation between INTUITIVE SURGICAL and Lord Abbett

Assuming the 90 days trading horizon INTUITIVE SURGICAL is expected to generate 3.42 times more return on investment than Lord Abbett. However, INTUITIVE SURGICAL is 3.42 times more volatile than Lord Abbett Short. It trades about 0.2 of its potential returns per unit of risk. Lord Abbett Short is currently generating about 0.19 per unit of risk. If you would invest  47,530  in INTUITIVE SURGICAL on October 23, 2024 and sell it today you would earn a total of  10,270  from holding INTUITIVE SURGICAL or generate 21.61% return on investment over 90 days.

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

INTUITIVE SURGICAL  vs.  Lord Abbett Short

INTUITIVE SURGICAL

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in INTUITIVE SURGICAL are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, INTUITIVE SURGICAL exhibited solid returns over the last few months and may actually be approaching a breakup point.

Lord Abbett Short

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lord Abbett Short are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, Lord Abbett 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 Lord Abbett

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

The idea behind INTUITIVE SURGICAL and Lord Abbett Short 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.