Correlation Between INTUITIVE SURGICAL and Carrier Global

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

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

Diversification Opportunities for INTUITIVE SURGICAL and Carrier Global

0.38

Correlation Coefficient

INTUITIVE SURGICAL  Carrier Global

Weak diversification

The 3 months correlation between INTUITIVE and Carrier is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding INTUITIVE SURGICAL and Carrier Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carrier Global 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 Carrier Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carrier Global has no effect on the direction of INTUITIVE SURGICAL i.e., INTUITIVE SURGICAL and Carrier Global go up and down completely randomly.

Pair Corralation between INTUITIVE SURGICAL and Carrier Global

Assuming the 90 days trading horizon INTUITIVE SURGICAL is expected to generate 1.13 times more return on investment than Carrier Global. However, INTUITIVE SURGICAL is 1.13 times more volatile than Carrier Global. It trades about -0.05 of its potential returns per unit of risk. Carrier Global is currently generating about -0.08 per unit of risk. If you would invest  51,050  in INTUITIVE SURGICAL on December 30, 2024 and sell it today you would lose (4,175) from holding INTUITIVE SURGICAL or give up 8.18% of portfolio value over 90 days.

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

INTUITIVE SURGICAL  vs.  Carrier Global

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. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Carrier Global

Risk-Adjusted Performance

Very Weak

Over the last 90 days Carrier Global has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with INTUITIVE SURGICAL and Carrier Global

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

The idea behind INTUITIVE SURGICAL and Carrier Global 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.