Correlation Between Intuitive Surgical and SHIP HEALTHCARE

Can any of the company-specific risk be diversified away by investing in both Intuitive Surgical and SHIP HEALTHCARE 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 SHIP HEALTHCARE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Intuitive Surgical and SHIP HEALTHCARE HLDGINC, you can compare the effects of market volatilities on Intuitive Surgical and SHIP HEALTHCARE 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 SHIP HEALTHCARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intuitive Surgical and SHIP HEALTHCARE.

Diversification Opportunities for Intuitive Surgical and SHIP HEALTHCARE

-0.67

Correlation Coefficient

Intuitive Surgical  SHIP HEALTHCARE

Excellent diversification

The 3 months correlation between Intuitive and SHIP is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Intuitive Surgical and SHIP HEALTHCARE HLDGINC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHIP HEALTHCARE HLDGINC 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 SHIP HEALTHCARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SHIP HEALTHCARE HLDGINC has no effect on the direction of Intuitive Surgical i.e., Intuitive Surgical and SHIP HEALTHCARE go up and down completely randomly.

Pair Corralation between Intuitive Surgical and SHIP HEALTHCARE

Assuming the 90 days trading horizon Intuitive Surgical is expected to generate 1.09 times more return on investment than SHIP HEALTHCARE. However, Intuitive Surgical is 1.09 times more volatile than SHIP HEALTHCARE HLDGINC. It trades about 0.13 of its potential returns per unit of risk. SHIP HEALTHCARE HLDGINC is currently generating about 0.0 per unit of risk. If you would invest  44,105  in Intuitive Surgical on September 23, 2024 and sell it today you would earn a total of  6,225  from holding Intuitive Surgical or generate 14.11% 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.  SHIP HEALTHCARE HLDGINC

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. Despite nearly fragile forward indicators, Intuitive Surgical reported solid returns over the last few months and may actually be approaching a breakup point.

SHIP HEALTHCARE HLDGINC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SHIP HEALTHCARE HLDGINC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, SHIP HEALTHCARE 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 SHIP HEALTHCARE

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

The idea behind Intuitive Surgical and SHIP HEALTHCARE HLDGINC 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.