Correlation Between Innovative Eyewear and Intuitive Surgical

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

By analyzing existing cross correlation between Innovative Eyewear and Intuitive Surgical, you can compare the effects of market volatilities on Innovative Eyewear and Intuitive Surgical 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 Innovative Eyewear with a short position of Intuitive Surgical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovative Eyewear and Intuitive Surgical.

Diversification Opportunities for Innovative Eyewear and Intuitive Surgical

-0.02

Correlation Coefficient

Innovative Eyewear  Intuitive Surgical

Good diversification

The 3 months correlation between Innovative and Intuitive is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Innovative Eyewear and Intuitive Surgical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intuitive Surgical and Innovative Eyewear 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 Innovative Eyewear are associated (or correlated) with Intuitive Surgical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intuitive Surgical has no effect on the direction of Innovative Eyewear i.e., Innovative Eyewear and Intuitive Surgical go up and down completely randomly.

Pair Corralation between Innovative Eyewear and Intuitive Surgical

Given the investment horizon of 90 days Innovative Eyewear is expected to generate 5.32 times more return on investment than Intuitive Surgical. However, Innovative Eyewear is 5.32 times more volatile than Intuitive Surgical. It trades about 0.11 of its potential returns per unit of risk. Intuitive Surgical is currently generating about 0.11 per unit of risk. If you would invest  449.00  in Innovative Eyewear on August 31, 2024 and sell it today you would earn a total of  218.00  from holding Innovative Eyewear or generate 48.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Innovative Eyewear  vs.  Intuitive Surgical

Innovative Eyewear

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Innovative Eyewear are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady fundamental indicators, Innovative Eyewear showed solid returns over the last few months and may actually be approaching a breakup point.

Intuitive Surgical

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Intuitive Surgical are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Intuitive Surgical may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Innovative Eyewear and Intuitive Surgical

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

The idea behind Innovative Eyewear and Intuitive Surgical 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.

Check out your portfolio center.

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.