Correlation Between INTUITIVE SURGICAL and Geberit AG

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

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

Diversification Opportunities for INTUITIVE SURGICAL and Geberit AG

-0.48

Correlation Coefficient

INTUITIVE SURGICAL  Geberit AG

Very good diversification

The 3 months correlation between INTUITIVE and Geberit is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding INTUITIVE SURGICAL and Geberit AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Geberit AG 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 Geberit AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Geberit AG has no effect on the direction of INTUITIVE SURGICAL i.e., INTUITIVE SURGICAL and Geberit AG go up and down completely randomly.

Pair Corralation between INTUITIVE SURGICAL and Geberit AG

Assuming the 90 days trading horizon INTUITIVE SURGICAL is expected to under-perform the Geberit AG. But the stock apears to be less risky and, when comparing its historical volatility, INTUITIVE SURGICAL is 1.94 times less risky than Geberit AG. The stock trades about -0.06 of its potential returns per unit of risk. The Geberit AG is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  5,250  in Geberit AG on December 5, 2024 and sell it today you would earn a total of  300.00  from holding Geberit AG or generate 5.71% return on investment over 90 days.

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

INTUITIVE SURGICAL  vs.  Geberit AG

INTUITIVE SURGICAL

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in INTUITIVE SURGICAL are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, INTUITIVE SURGICAL is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Geberit AG

Risk-Adjusted Performance

Very Weak

Over the last 90 days Geberit AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Geberit AG is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with INTUITIVE SURGICAL and Geberit AG

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

The idea behind INTUITIVE SURGICAL and Geberit AG 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.