Correlation Between ON SEMICONDUCTOR and Edwards Lifesciences

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

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

Diversification Opportunities for ON SEMICONDUCTOR and Edwards Lifesciences

-0.22

Correlation Coefficient

ON SEMICONDUCTOR  Edwards Lifesciences

Very good diversification

The 3 months correlation between XS4 and Edwards is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding ON SEMICONDUCTOR and Edwards Lifesciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edwards Lifesciences and ON SEMICONDUCTOR 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 ON SEMICONDUCTOR 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 ON SEMICONDUCTOR i.e., ON SEMICONDUCTOR and Edwards Lifesciences go up and down completely randomly.

Pair Corralation between ON SEMICONDUCTOR and Edwards Lifesciences

If you would invest  6,700  in ON SEMICONDUCTOR on October 9, 2024 and sell it today you would lose (487.00) from holding ON SEMICONDUCTOR or give up 7.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

ON SEMICONDUCTOR  vs.  Edwards Lifesciences

ON SEMICONDUCTOR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ON SEMICONDUCTOR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, ON SEMICONDUCTOR is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Edwards Lifesciences

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Edwards Lifesciences has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly weak basic indicators, Edwards Lifesciences reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ON SEMICONDUCTOR and Edwards Lifesciences

The main advantage of trading using opposite ON SEMICONDUCTOR and Edwards Lifesciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ON SEMICONDUCTOR 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 ON SEMICONDUCTOR 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.