Correlation Between Edwards Lifesciences and Neuropace

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

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

Diversification Opportunities for Edwards Lifesciences and Neuropace

-0.42

Correlation Coefficient

Edwards Lifesciences  Neuropace

Very good diversification

The 3 months correlation between Edwards and Neuropace is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Edwards Lifesciences Corp and Neuropace in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neuropace and Edwards Lifesciences 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 Edwards Lifesciences Corp are associated (or correlated) with Neuropace. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neuropace has no effect on the direction of Edwards Lifesciences i.e., Edwards Lifesciences and Neuropace go up and down completely randomly.

Pair Corralation between Edwards Lifesciences and Neuropace

Allowing for the 90-day total investment horizon Edwards Lifesciences Corp is expected to under-perform the Neuropace. But the stock apears to be less risky and, when comparing its historical volatility, Edwards Lifesciences Corp is 3.84 times less risky than Neuropace. The stock trades about -0.34 of its potential returns per unit of risk. The Neuropace is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  1,368  in Neuropace on February 1, 2024 and sell it today you would lose (69.00) from holding Neuropace or give up 5.04% of portfolio value over 90 days.

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

Edwards Lifesciences Corp  vs.  Neuropace

Edwards Lifesciences Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Edwards Lifesciences Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Edwards Lifesciences may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Neuropace

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Neuropace has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Edwards Lifesciences and Neuropace

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

The idea behind Edwards Lifesciences Corp and Neuropace 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.