Correlation Between Intuitive Surgical and Broadcom

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

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

Diversification Opportunities for Intuitive Surgical and Broadcom

0.04

Correlation Coefficient

Intuitive Surgical  Broadcom

Significant diversification

The 3 months correlation between Intuitive and Broadcom is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Intuitive Surgical and Broadcom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Broadcom and Intuitive Surgical 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 Intuitive Surgical are associated (or correlated) with Broadcom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Broadcom has no effect on the direction of Intuitive Surgical i.e., Intuitive Surgical and Broadcom go up and down completely randomly.

Pair Corralation between Intuitive Surgical and Broadcom

Assuming the 90 days trading horizon Intuitive Surgical is expected to generate 13.47 times less return on investment than Broadcom. But when comparing it to its historical volatility, Intuitive Surgical is 1.43 times less risky than Broadcom. It trades about 0.03 of its potential returns per unit of risk. Broadcom is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  15,713  in Broadcom on April 23, 2025 and sell it today you would earn a total of  8,927  from holding Broadcom or generate 56.81% return on investment over 90 days.

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

Intuitive Surgical  vs.  Broadcom

Intuitive Surgical

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Intuitive Surgical are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward indicators, Intuitive Surgical is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Broadcom

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Broadcom are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile fundamental indicators, Broadcom unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Intuitive Surgical and Broadcom

The main advantage of trading using opposite Intuitive Surgical and Broadcom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intuitive Surgical position performs unexpectedly, Broadcom 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 Broadcom will offset losses from the drop in Broadcom's long position.

The idea behind Intuitive Surgical and Broadcom 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.