Correlation Between INTUITIVE SURGICAL and Airbus SE

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

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

Diversification Opportunities for INTUITIVE SURGICAL and Airbus SE

0.75

Correlation Coefficient

INTUITIVE SURGICAL  Airbus SE

Poor diversification

The 3 months correlation between INTUITIVE and Airbus is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding INTUITIVE SURGICAL and Airbus SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airbus SE 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 Airbus SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airbus SE has no effect on the direction of INTUITIVE SURGICAL i.e., INTUITIVE SURGICAL and Airbus SE go up and down completely randomly.

Pair Corralation between INTUITIVE SURGICAL and Airbus SE

Assuming the 90 days trading horizon INTUITIVE SURGICAL is expected to generate 1.29 times less return on investment than Airbus SE. In addition to that, INTUITIVE SURGICAL is 1.19 times more volatile than Airbus SE. It trades about 0.13 of its total potential returns per unit of risk. Airbus SE is currently generating about 0.2 per unit of volatility. If you would invest  13,056  in Airbus SE on September 13, 2024 and sell it today you would earn a total of  2,574  from holding Airbus SE or generate 19.72% return on investment over 90 days.

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

INTUITIVE SURGICAL  vs.  Airbus SE

INTUITIVE SURGICAL

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in INTUITIVE SURGICAL are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, INTUITIVE SURGICAL exhibited solid returns over the last few months and may actually be approaching a breakup point.

Airbus SE

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Airbus SE are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Airbus SE unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with INTUITIVE SURGICAL and Airbus SE

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

The idea behind INTUITIVE SURGICAL and Airbus SE 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.