Correlation Between INTUITIVE SURGICAL and Prudential Financial

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

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

Diversification Opportunities for INTUITIVE SURGICAL and Prudential Financial

0.58

Correlation Coefficient

INTUITIVE SURGICAL  Prudential Financial

Very weak diversification

The 3 months correlation between INTUITIVE and Prudential is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding INTUITIVE SURGICAL and Prudential Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Financial 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 Prudential Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Financial has no effect on the direction of INTUITIVE SURGICAL i.e., INTUITIVE SURGICAL and Prudential Financial go up and down completely randomly.

Pair Corralation between INTUITIVE SURGICAL and Prudential Financial

Assuming the 90 days trading horizon INTUITIVE SURGICAL is expected to under-perform the Prudential Financial. In addition to that, INTUITIVE SURGICAL is 1.38 times more volatile than Prudential Financial. It trades about -0.05 of its total potential returns per unit of risk. Prudential Financial is currently generating about -0.05 per unit of volatility. If you would invest  11,232  in Prudential Financial on December 25, 2024 and sell it today you would lose (652.00) from holding Prudential Financial or give up 5.8% of portfolio value over 90 days.

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

INTUITIVE SURGICAL  vs.  Prudential Financial

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 fragile 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.

Prudential Financial

Risk-Adjusted Performance

Very Weak

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

Pair Trading with INTUITIVE SURGICAL and Prudential Financial

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

The idea behind INTUITIVE SURGICAL and Prudential Financial 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.