Correlation Between Covanta Holding and Edwards Lifesciences
Can any of the company-specific risk be diversified away by investing in both Covanta Holding 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 Covanta Holding and Edwards Lifesciences into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Covanta Holding and Edwards Lifesciences Corp, you can compare the effects of market volatilities on Covanta Holding 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 Covanta Holding with a short position of Edwards Lifesciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Covanta Holding and Edwards Lifesciences.
Diversification Opportunities for Covanta Holding and Edwards Lifesciences
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Covanta and Edwards is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Covanta Holding and Edwards Lifesciences Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edwards Lifesciences Corp and Covanta Holding 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 Covanta Holding 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 Corp has no effect on the direction of Covanta Holding i.e., Covanta Holding and Edwards Lifesciences go up and down completely randomly.
Pair Corralation between Covanta Holding and Edwards Lifesciences
If you would invest (100.00) in Covanta Holding on January 16, 2024 and sell it today you would earn a total of 100.00 from holding Covanta Holding or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Covanta Holding vs. Edwards Lifesciences Corp
Performance |
| Timeline |
| Covanta Holding |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Edwards Lifesciences Corp |
Covanta Holding and Edwards Lifesciences Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Covanta Holding and Edwards Lifesciences
The main advantage of trading using opposite Covanta Holding and Edwards Lifesciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Covanta Holding 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.| Covanta Holding vs. Chester Mining | Covanta Holding vs. Genuine Parts Co | Covanta Holding vs. Aspen Aerogels | Covanta Holding vs. Cedar Realty Trust |
| Edwards Lifesciences vs. The Ensign Group | Edwards Lifesciences vs. Select Medical Holdings | Edwards Lifesciences vs. Encompass Health Corp | Edwards Lifesciences vs. Enhabit |
Check out your portfolio center.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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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