Correlation Between IShares Core and Edwards Lifesciences
Can any of the company-specific risk be diversified away by investing in both IShares Core 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 IShares Core and Edwards Lifesciences into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Core SP and Edwards Lifesciences Corp, you can compare the effects of market volatilities on IShares Core 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 IShares Core with a short position of Edwards Lifesciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and Edwards Lifesciences.
Diversification Opportunities for IShares Core and Edwards Lifesciences
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and Edwards is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP 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 IShares Core 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 iShares Core SP 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 IShares Core i.e., IShares Core and Edwards Lifesciences go up and down completely randomly.
Pair Corralation between IShares Core and Edwards Lifesciences
Given the investment horizon of 90 days IShares Core is expected to generate 4.63 times less return on investment than Edwards Lifesciences. But when comparing it to its historical volatility, iShares Core SP is 2.63 times less risky than Edwards Lifesciences. It trades about 0.09 of its potential returns per unit of risk. Edwards Lifesciences Corp is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 7,254 in Edwards Lifesciences Corp on January 24, 2024 and sell it today you would earn a total of 1,521 from holding Edwards Lifesciences Corp or generate 20.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Core SP vs. Edwards Lifesciences Corp
Performance |
| Timeline |
| iShares Core SP |
| Edwards Lifesciences Corp |
IShares Core and Edwards Lifesciences Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and Edwards Lifesciences
The main advantage of trading using opposite IShares Core and Edwards Lifesciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core 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.| IShares Core vs. iShares Core MSCI | IShares Core vs. iShares Core MSCI | IShares Core vs. iShares Core MSCI | IShares Core vs. iShares Core SP |
| Edwards Lifesciences vs. HealthStream | Edwards Lifesciences vs. National Research Corp | Edwards Lifesciences vs. HealthEquity | Edwards Lifesciences vs. Health Catalyst |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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