Correlation Between Electromed and Intuitive Surgical

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

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

Diversification Opportunities for Electromed and Intuitive Surgical

0.26

Correlation Coefficient

Electromed  Intuitive Surgical

Modest diversification

The 3 months correlation between Electromed and Intuitive is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Electromed and Intuitive Surgical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intuitive Surgical and Electromed 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 Electromed 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 Electromed i.e., Electromed and Intuitive Surgical go up and down completely randomly.

Pair Corralation between Electromed and Intuitive Surgical

Given the investment horizon of 90 days Electromed is expected to generate 2.4 times more return on investment than Intuitive Surgical. However, Electromed is 2.4 times more volatile than Intuitive Surgical. It trades about 0.11 of its potential returns per unit of risk. Intuitive Surgical is currently generating about -0.21 per unit of risk. If you would invest  1,622  in Electromed on February 1, 2024 and sell it today you would earn a total of  117.00  from holding Electromed or generate 7.21% return on investment over 90 days.

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

Electromed  vs.  Intuitive Surgical

Electromed

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Electromed are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain primary indicators, Electromed exhibited solid returns over the last few months and may actually be approaching a breakup point.

Intuitive Surgical

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Electromed and Intuitive Surgical

The main advantage of trading using opposite Electromed and Intuitive Surgical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electromed 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 Electromed 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.