Correlation Between Escalon Medical and Edwards Lifesciences

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

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

Diversification Opportunities for Escalon Medical and Edwards Lifesciences

-0.75

Correlation Coefficient

Escalon Medical  Edwards Lifesciences

Pay attention - limited upside

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

Pair Corralation between Escalon Medical and Edwards Lifesciences

If you would invest  6.00  in Escalon Medical Corp on January 20, 2024 and sell it today you would earn a total of  0.00  from holding Escalon Medical Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	4.76%
Values	Daily Returns

Escalon Medical Corp  vs.  Edwards Lifesciences Corp

Escalon Medical Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Escalon Medical Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, Escalon Medical is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Edwards Lifesciences Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Edwards Lifesciences Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Edwards Lifesciences showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Escalon Medical and Edwards Lifesciences

The main advantage of trading using opposite Escalon Medical and Edwards Lifesciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Escalon Medical 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 Escalon Medical Corp 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.

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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 Transaction History module to view history of all your transactions and understand their impact on performance.