Correlation Between Edwards Lifesciences and MiMedx

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

Diversification Opportunities for Edwards Lifesciences and MiMedx

-0.28

Correlation Coefficient

Edwards Lifesciences  MiMedx

Very good diversification

The 3 months correlation between Edwards and MiMedx is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Edwards Lifesciences Corp and MiMedx Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MiMedx Group 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 MiMedx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MiMedx Group has no effect on the direction of Edwards Lifesciences i.e., Edwards Lifesciences and MiMedx go up and down completely randomly.

Pair Corralation between Edwards Lifesciences and MiMedx

Allowing for the 90-day total investment horizon Edwards Lifesciences Corp is expected to under-perform the MiMedx. But the stock apears to be less risky and, when comparing its historical volatility, Edwards Lifesciences Corp is 1.89 times less risky than MiMedx. The stock trades about 0.0 of its potential returns per unit of risk. The MiMedx Group is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  360.00  in MiMedx Group on January 26, 2024 and sell it today you would earn a total of  283.00  from holding MiMedx Group or generate 78.61% return on investment over 90 days.

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

Edwards Lifesciences Corp  vs.  MiMedx Group

Edwards Lifesciences Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Edwards Lifesciences Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Edwards Lifesciences showed solid returns over the last few months and may actually be approaching a breakup point.

MiMedx Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MiMedx Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Edwards Lifesciences and MiMedx

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

The idea behind Edwards Lifesciences Corp and MiMedx Group 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..