Correlation Between SLR Investment and INTUITIVE SURGICAL

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

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

Diversification Opportunities for SLR Investment and INTUITIVE SURGICAL

0.94

Correlation Coefficient

SLR Investment  INTUITIVE SURGICAL

Almost no diversification

The 3 months correlation between SLR and INTUITIVE is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding SLR Investment Corp and INTUITIVE SURGICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTUITIVE SURGICAL and SLR Investment 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 SLR Investment Corp 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 SLR Investment i.e., SLR Investment and INTUITIVE SURGICAL go up and down completely randomly.

Pair Corralation between SLR Investment and INTUITIVE SURGICAL

Assuming the 90 days horizon SLR Investment Corp is expected to generate 1.2 times more return on investment than INTUITIVE SURGICAL. However, SLR Investment is 1.2 times more volatile than INTUITIVE SURGICAL. It trades about 0.08 of its potential returns per unit of risk. INTUITIVE SURGICAL is currently generating about -0.25 per unit of risk. If you would invest  1,509  in SLR Investment Corp on September 23, 2024 and sell it today you would earn a total of  32.00  from holding SLR Investment Corp or generate 2.12% return on investment over 90 days.

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

SLR Investment Corp  vs.  INTUITIVE SURGICAL

SLR Investment Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SLR Investment Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, SLR Investment reported solid returns over the last few months and may actually be approaching a breakup point.

INTUITIVE SURGICAL

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in INTUITIVE SURGICAL are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. 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 SLR Investment and INTUITIVE SURGICAL

The main advantage of trading using opposite SLR Investment and INTUITIVE SURGICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SLR Investment 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 SLR Investment Corp 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.