Correlation Between INTUITIVE SURGICAL and LANDSEA HOMES

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

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

Diversification Opportunities for INTUITIVE SURGICAL and LANDSEA HOMES

-0.39

Correlation Coefficient

INTUITIVE SURGICAL  LANDSEA HOMES

Very good diversification

The 3 months correlation between INTUITIVE and LANDSEA is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding INTUITIVE SURGICAL and LANDSEA HOMES P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LANDSEA HOMES P 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 LANDSEA HOMES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LANDSEA HOMES P has no effect on the direction of INTUITIVE SURGICAL i.e., INTUITIVE SURGICAL and LANDSEA HOMES go up and down completely randomly.

Pair Corralation between INTUITIVE SURGICAL and LANDSEA HOMES

Assuming the 90 days trading horizon INTUITIVE SURGICAL is expected to generate 0.62 times more return on investment than LANDSEA HOMES. However, INTUITIVE SURGICAL is 1.62 times less risky than LANDSEA HOMES. It trades about 0.09 of its potential returns per unit of risk. LANDSEA HOMES P is currently generating about 0.04 per unit of risk. If you would invest  23,675  in INTUITIVE SURGICAL on October 8, 2024 and sell it today you would earn a total of  27,225  from holding INTUITIVE SURGICAL or generate 114.99% 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.  LANDSEA HOMES P

INTUITIVE SURGICAL

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in INTUITIVE SURGICAL are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, INTUITIVE SURGICAL exhibited solid returns over the last few months and may actually be approaching a breakup point.

LANDSEA HOMES P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LANDSEA HOMES P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with INTUITIVE SURGICAL and LANDSEA HOMES

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

The idea behind INTUITIVE SURGICAL and LANDSEA HOMES P 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.