Correlation Between Edwards Lifesciences and Stryker
Can any of the company-specific risk be diversified away by investing in both Edwards Lifesciences and Stryker 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 Stryker 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 Stryker, you can compare the effects of market volatilities on Edwards Lifesciences and Stryker 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 Stryker. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edwards Lifesciences and Stryker.
Diversification Opportunities for Edwards Lifesciences and Stryker
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Edwards and Stryker is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Edwards Lifesciences Corp and Stryker in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stryker 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 Stryker. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stryker has no effect on the direction of Edwards Lifesciences i.e., Edwards Lifesciences and Stryker go up and down completely randomly.
Pair Corralation between Edwards Lifesciences and Stryker
Allowing for the 90-day total investment horizon Edwards Lifesciences Corp is expected to under-perform the Stryker. In addition to that, Edwards Lifesciences is 1.09 times more volatile than Stryker. It trades about -0.22 of its total potential returns per unit of risk. Stryker is currently generating about -0.18 per unit of volatility. If you would invest 35,023 in Stryker on January 25, 2024 and sell it today you would lose (1,532) from holding Stryker or give up 4.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Edwards Lifesciences Corp vs. Stryker
Performance |
| Timeline |
| Edwards Lifesciences Corp |
| Stryker |
Edwards Lifesciences and Stryker Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Edwards Lifesciences and Stryker
The main advantage of trading using opposite Edwards Lifesciences and Stryker positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edwards Lifesciences position performs unexpectedly, Stryker 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 Stryker will offset losses from the drop in Stryker's long position.| Edwards Lifesciences vs. HealthStream | Edwards Lifesciences vs. National Research Corp | Edwards Lifesciences vs. HealthEquity | Edwards Lifesciences vs. Health Catalyst |
| Stryker vs. HealthStream | Stryker vs. National Research Corp | Stryker vs. HealthEquity | Stryker 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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