Correlation Between Nano X and Edwards Lifesciences

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

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

Diversification Opportunities for Nano X and Edwards Lifesciences

0.3

Correlation Coefficient

Nano X  Edwards Lifesciences

Weak diversification

The 3 months correlation between Nano and Edwards is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Nano X Imaging and Edwards Lifesciences Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edwards Lifesciences Corp and Nano X 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 Nano X Imaging 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 Corp has no effect on the direction of Nano X i.e., Nano X and Edwards Lifesciences go up and down completely randomly.

Pair Corralation between Nano X and Edwards Lifesciences

Given the investment horizon of 90 days Nano X Imaging is expected to generate 3.27 times more return on investment than Edwards Lifesciences. However, Nano X is 3.27 times more volatile than Edwards Lifesciences Corp. It trades about 0.08 of its potential returns per unit of risk. Edwards Lifesciences Corp is currently generating about 0.08 per unit of risk. If you would invest  620.00  in Nano X Imaging on September 12, 2024 and sell it today you would earn a total of  121.00  from holding Nano X Imaging or generate 19.52% return on investment over 90 days.

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

Nano X Imaging  vs.  Edwards Lifesciences Corp

Nano X Imaging

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nano X Imaging are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Nano X showed solid returns over the last few months and may actually be approaching a breakup point.

Edwards Lifesciences Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Edwards Lifesciences Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, Edwards Lifesciences may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Nano X and Edwards Lifesciences

The main advantage of trading using opposite Nano X and Edwards Lifesciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nano X 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 Nano X Imaging and Edwards Lifesciences Corp 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.