Correlation Between INTUITIVE SURGICAL and Takeda Pharmaceutical

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

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

Diversification Opportunities for INTUITIVE SURGICAL and Takeda Pharmaceutical

-0.63

Correlation Coefficient

INTUITIVE SURGICAL  Takeda Pharmaceutical

Excellent diversification

The 3 months correlation between INTUITIVE and Takeda is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding INTUITIVE SURGICAL and Takeda Pharmaceutical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Takeda Pharmaceutical 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 Takeda Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Takeda Pharmaceutical has no effect on the direction of INTUITIVE SURGICAL i.e., INTUITIVE SURGICAL and Takeda Pharmaceutical go up and down completely randomly.

Pair Corralation between INTUITIVE SURGICAL and Takeda Pharmaceutical

Assuming the 90 days trading horizon INTUITIVE SURGICAL is expected to under-perform the Takeda Pharmaceutical. In addition to that, INTUITIVE SURGICAL is 1.76 times more volatile than Takeda Pharmaceutical. It trades about -0.04 of its total potential returns per unit of risk. Takeda Pharmaceutical is currently generating about 0.12 per unit of volatility. If you would invest  1,260  in Takeda Pharmaceutical on December 31, 2024 and sell it today you would earn a total of  120.00  from holding Takeda Pharmaceutical or generate 9.52% return on investment over 90 days.

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

INTUITIVE SURGICAL  vs.  Takeda Pharmaceutical

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 rather sound technical and fundamental indicators, INTUITIVE SURGICAL is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Takeda Pharmaceutical

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Takeda Pharmaceutical are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain fundamental indicators, Takeda Pharmaceutical may actually be approaching a critical reversion point that can send shares even higher in May 2025.

Pair Trading with INTUITIVE SURGICAL and Takeda Pharmaceutical

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

The idea behind INTUITIVE SURGICAL and Takeda Pharmaceutical 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.