Correlation Between Edwards Lifesciences and Medtronic PLC

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Edwards Lifesciences and Medtronic PLC 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 Medtronic PLC 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 Medtronic PLC, you can compare the effects of market volatilities on Edwards Lifesciences and Medtronic PLC 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 Medtronic PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edwards Lifesciences and Medtronic PLC.

Diversification Opportunities for Edwards Lifesciences and Medtronic PLC

-0.25
  Correlation Coefficient

Very good diversification

The 3 months correlation between Edwards and Medtronic is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Edwards Lifesciences Corp and Medtronic PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medtronic PLC 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 Medtronic PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medtronic PLC has no effect on the direction of Edwards Lifesciences i.e., Edwards Lifesciences and Medtronic PLC go up and down completely randomly.

Pair Corralation between Edwards Lifesciences and Medtronic PLC

Allowing for the 90-day total investment horizon Edwards Lifesciences Corp is expected to generate 2.1 times more return on investment than Medtronic PLC. However, Edwards Lifesciences is 2.1 times more volatile than Medtronic PLC. It trades about 0.18 of its potential returns per unit of risk. Medtronic PLC is currently generating about 0.11 per unit of risk. If you would invest  7,625  in Edwards Lifesciences Corp on December 29, 2023 and sell it today you would earn a total of  1,931  from holding Edwards Lifesciences Corp or generate 25.32% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Edwards Lifesciences Corp  vs.  Medtronic PLC

 Performance 
       Timeline  
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 conflicting basic indicators, Edwards Lifesciences showed solid returns over the last few months and may actually be approaching a breakup point.
Medtronic PLC 

Risk-Adjusted Performance

8 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Medtronic PLC are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental indicators, Medtronic PLC may actually be approaching a critical reversion point that can send shares even higher in April 2024.

Edwards Lifesciences and Medtronic PLC Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Edwards Lifesciences and Medtronic PLC

The main advantage of trading using opposite Edwards Lifesciences and Medtronic PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edwards Lifesciences position performs unexpectedly, Medtronic PLC 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 Medtronic PLC will offset losses from the drop in Medtronic PLC's long position.
The idea behind Edwards Lifesciences Corp and Medtronic PLC 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.

Other Complementary Tools

Fundamental Analysis
View fundamental data based on most recent published financial statements
Economic Indicators
Top statistical indicators that provide insights into how an economy is performing
Bond Analysis
Evaluate and analyze corporate bonds as a potential investment for your portfolios.
Equity Forecasting
Use basic forecasting models to generate price predictions and determine price momentum
Top Crypto Exchanges
Search and analyze digital assets across top global cryptocurrency exchanges
Fundamentals Comparison
Compare fundamentals across multiple equities to find investing opportunities
Share Portfolio
Track or share privately all of your investments from the convenience of any device
Equity Search
Search for actively traded equities including funds and ETFs from over 30 global markets
Price Transformation
Use Price Transformation models to analyze the depth of different equity instruments across global markets
Pair Correlation
Compare performance and examine fundamental relationship between any two equity instruments
Global Correlations
Find global opportunities by holding instruments from different markets