Correlation Between Hospital Mater and Edwards Lifesciences

Can any of the company-specific risk be diversified away by investing in both Hospital Mater and Edwards Lifesciences 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 Hospital Mater and Edwards Lifesciences into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hospital Mater Dei and Edwards Lifesciences, you can compare the effects of market volatilities on Hospital Mater and Edwards Lifesciences 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 Hospital Mater with a short position of Edwards Lifesciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hospital Mater and Edwards Lifesciences.

Diversification Opportunities for Hospital Mater and Edwards Lifesciences

-0.9

Correlation Coefficient

Hospital Mater  Edwards Lifesciences

Pay attention - limited upside

The 3 months correlation between Hospital and Edwards is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Hospital Mater Dei and Edwards Lifesciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edwards Lifesciences and Hospital Mater 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 Hospital Mater Dei are associated (or correlated) with Edwards Lifesciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edwards Lifesciences has no effect on the direction of Hospital Mater i.e., Hospital Mater and Edwards Lifesciences go up and down completely randomly.

Pair Corralation between Hospital Mater and Edwards Lifesciences

Assuming the 90 days trading horizon Hospital Mater Dei is expected to under-perform the Edwards Lifesciences. In addition to that, Hospital Mater is 2.05 times more volatile than Edwards Lifesciences. It trades about -0.29 of its total potential returns per unit of risk. Edwards Lifesciences is currently generating about 0.48 per unit of volatility. If you would invest  10,622  in Edwards Lifesciences on September 29, 2024 and sell it today you would earn a total of  1,114  from holding Edwards Lifesciences or generate 10.49% return on investment over 90 days.

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

Hospital Mater Dei  vs.  Edwards Lifesciences

Hospital Mater Dei

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hospital Mater Dei has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Edwards Lifesciences

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Edwards Lifesciences are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Edwards Lifesciences sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hospital Mater and Edwards Lifesciences

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

The idea behind Hospital Mater Dei and Edwards Lifesciences 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.