Correlation Between Smith Nephew and Intuitive Surgical
Can any of the company-specific risk be diversified away by investing in both Smith Nephew 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 Smith Nephew and Intuitive Surgical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smith Nephew SNATS and Intuitive Surgical, you can compare the effects of market volatilities on Smith Nephew 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 Smith Nephew with a short position of Intuitive Surgical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smith Nephew and Intuitive Surgical.
Diversification Opportunities for Smith Nephew and Intuitive Surgical
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Smith and Intuitive is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Smith Nephew SNATS and Intuitive Surgical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intuitive Surgical and Smith Nephew 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 Smith Nephew SNATS 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 Smith Nephew i.e., Smith Nephew and Intuitive Surgical go up and down completely randomly.
Pair Corralation between Smith Nephew and Intuitive Surgical
Considering the 90-day investment horizon Smith Nephew SNATS is expected to under-perform the Intuitive Surgical. But the stock apears to be less risky and, when comparing its historical volatility, Smith Nephew SNATS is 1.3 times less risky than Intuitive Surgical. The stock trades about -0.02 of its potential returns per unit of risk. The Intuitive Surgical is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 24,066 in Intuitive Surgical on January 20, 2024 and sell it today you would earn a total of 13,197 from holding Intuitive Surgical or generate 54.84% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Smith Nephew SNATS vs. Intuitive Surgical
Performance |
Timeline |
Smith Nephew SNATS |
Intuitive Surgical |
Smith Nephew and Intuitive Surgical Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Smith Nephew and Intuitive Surgical
The main advantage of trading using opposite Smith Nephew and Intuitive Surgical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smith Nephew 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.Smith Nephew vs. Agilent Technologies | Smith Nephew vs. Illumina | Smith Nephew vs. Waters | Smith Nephew vs. Thermo Fisher Scientific |
Intuitive Surgical vs. Agilent Technologies | Intuitive Surgical vs. Illumina | Intuitive Surgical vs. Waters | Intuitive Surgical vs. Thermo Fisher Scientific |
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 CEOs Directory module to screen CEOs from public companies around the world.
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