Correlation Between Swiss Life and INTUITIVE SURGICAL

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

By analyzing existing cross correlation between Swiss Life Holding and INTUITIVE SURGICAL, you can compare the effects of market volatilities on Swiss Life 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 Swiss Life with a short position of INTUITIVE SURGICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swiss Life and INTUITIVE SURGICAL.

Diversification Opportunities for Swiss Life and INTUITIVE SURGICAL

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Correlation Coefficient

Swiss Life  INTUITIVE SURGICAL

Pay attention - limited upside

The 3 months correlation between Swiss and INTUITIVE is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Swiss Life Holding and INTUITIVE SURGICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTUITIVE SURGICAL and Swiss Life 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 Swiss Life Holding 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 Swiss Life i.e., Swiss Life and INTUITIVE SURGICAL go up and down completely randomly.

Pair Corralation between Swiss Life and INTUITIVE SURGICAL

Assuming the 90 days trading horizon Swiss Life Holding is expected to generate 1.56 times more return on investment than INTUITIVE SURGICAL. However, Swiss Life is 1.56 times more volatile than INTUITIVE SURGICAL. It trades about -0.02 of its potential returns per unit of risk. INTUITIVE SURGICAL is currently generating about -0.08 per unit of risk. If you would invest  3,680  in Swiss Life Holding on October 5, 2024 and sell it today you would lose (40.00) from holding Swiss Life Holding or give up 1.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Swiss Life Holding  vs.  INTUITIVE SURGICAL

Swiss Life Holding

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Swiss Life Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Swiss Life is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

INTUITIVE SURGICAL

Risk-Adjusted Performance

0 of 100

Good

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 fragile technical and fundamental indicators, INTUITIVE SURGICAL exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Swiss Life and INTUITIVE SURGICAL

The main advantage of trading using opposite Swiss Life and INTUITIVE SURGICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swiss Life 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 Swiss Life Holding 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.

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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.