Correlation Between Edwards Lifesciences and Star Equity

Can any of the company-specific risk be diversified away by investing in both Edwards Lifesciences and Star Equity 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 Star Equity 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 Star Equity Holdings, you can compare the effects of market volatilities on Edwards Lifesciences and Star Equity 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 Star Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edwards Lifesciences and Star Equity.

Diversification Opportunities for Edwards Lifesciences and Star Equity

0.0

Correlation Coefficient

Edwards Lifesciences  Star Equity

Pay attention - limited upside

The 3 months correlation between Edwards and Star is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Edwards Lifesciences Corp and Star Equity Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Star Equity Holdings 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 Star Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Star Equity Holdings has no effect on the direction of Edwards Lifesciences i.e., Edwards Lifesciences and Star Equity go up and down completely randomly.

Pair Corralation between Edwards Lifesciences and Star Equity

If you would invest  8,374  in Edwards Lifesciences Corp on January 24, 2024 and sell it today you would earn a total of  322.00  from holding Edwards Lifesciences Corp or generate 3.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Edwards Lifesciences Corp  vs.  Star Equity Holdings

Edwards Lifesciences Corp

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Edwards Lifesciences Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Edwards Lifesciences showed solid returns over the last few months and may actually be approaching a breakup point.

Star Equity Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Edwards Lifesciences and Star Equity

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

The idea behind Edwards Lifesciences Corp and Star Equity Holdings 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.