Correlation Between EDAP TMS and Edwards Lifesciences

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both EDAP TMS 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 EDAP TMS and Edwards Lifesciences into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EDAP TMS SA and Edwards Lifesciences Corp, you can compare the effects of market volatilities on EDAP TMS 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 EDAP TMS with a short position of Edwards Lifesciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of EDAP TMS and Edwards Lifesciences.

Diversification Opportunities for EDAP TMS and Edwards Lifesciences

0.75
  Correlation Coefficient

Poor diversification

The 3 months correlation between EDAP and Edwards is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding EDAP TMS SA 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 EDAP TMS 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 EDAP TMS SA 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 EDAP TMS i.e., EDAP TMS and Edwards Lifesciences go up and down completely randomly.

Pair Corralation between EDAP TMS and Edwards Lifesciences

Given the investment horizon of 90 days EDAP TMS SA is expected to generate 1.52 times more return on investment than Edwards Lifesciences. However, EDAP TMS is 1.52 times more volatile than Edwards Lifesciences Corp. It trades about 0.02 of its potential returns per unit of risk. Edwards Lifesciences Corp is currently generating about -0.01 per unit of risk. If you would invest  725.00  in EDAP TMS SA on December 30, 2023 and sell it today you would earn a total of  10.00  from holding EDAP TMS SA or generate 1.38% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

EDAP TMS SA  vs.  Edwards Lifesciences Corp

 Performance 
       Timeline  
EDAP TMS SA 

Risk-Adjusted Performance

14 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in EDAP TMS SA are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, EDAP TMS reported solid returns over the last few months and may actually be approaching a breakup point.
Edwards Lifesciences Corp 

Risk-Adjusted Performance

14 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Edwards Lifesciences Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Edwards Lifesciences showed solid returns over the last few months and may actually be approaching a breakup point.

EDAP TMS and Edwards Lifesciences Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with EDAP TMS and Edwards Lifesciences

The main advantage of trading using opposite EDAP TMS and Edwards Lifesciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EDAP TMS 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.
The idea behind EDAP TMS SA and Edwards Lifesciences Corp 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.
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.

Other Complementary Tools

Portfolio Manager
State of the art Portfolio Manager to monitor and improve performance of your invested capital
Sign In To Macroaxis
Sign in to explore Macroaxis' wealth optimization platform and fintech modules
Crypto Correlations
Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins
Technical Analysis
Check basic technical indicators and analysis based on most latest market data
Bond Analysis
Evaluate and analyze corporate bonds as a potential investment for your portfolios.
Portfolio Diagnostics
Use generated alerts and portfolio events aggregator to diagnose current holdings