Correlation Between INTUITIVE SURGICAL and Xtrackers LevDAX

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

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

Diversification Opportunities for INTUITIVE SURGICAL and Xtrackers LevDAX

0.38

Correlation Coefficient

INTUITIVE SURGICAL  Xtrackers LevDAX

Weak diversification

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

Pair Corralation between INTUITIVE SURGICAL and Xtrackers LevDAX

Assuming the 90 days trading horizon INTUITIVE SURGICAL is expected to under-perform the Xtrackers LevDAX. But the stock apears to be less risky and, when comparing its historical volatility, INTUITIVE SURGICAL is 1.43 times less risky than Xtrackers LevDAX. The stock trades about -0.06 of its potential returns per unit of risk. The Xtrackers LevDAX is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  18,422  in Xtrackers LevDAX on September 22, 2024 and sell it today you would earn a total of  2,308  from holding Xtrackers LevDAX or generate 12.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

INTUITIVE SURGICAL  vs.  Xtrackers LevDAX

INTUITIVE SURGICAL

Risk-Adjusted Performance

10 of 100

Good

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.

Xtrackers LevDAX

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Xtrackers LevDAX are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Xtrackers LevDAX reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with INTUITIVE SURGICAL and Xtrackers LevDAX

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

The idea behind INTUITIVE SURGICAL and Xtrackers LevDAX 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.