Correlation Between Intuitive Surgical and Best Buy

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Can any of the company-specific risk be diversified away by investing in both Intuitive Surgical and Best Buy 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 Intuitive Surgical and Best Buy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intuitive Surgical and Best Buy Co, you can compare the effects of market volatilities on Intuitive Surgical and Best Buy 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 Intuitive Surgical with a short position of Best Buy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intuitive Surgical and Best Buy.

Diversification Opportunities for Intuitive Surgical and Best Buy

0.25
  Correlation Coefficient

Modest diversification

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

Pair Corralation between Intuitive Surgical and Best Buy

Given the investment horizon of 90 days Intuitive Surgical is expected to generate 0.95 times more return on investment than Best Buy. However, Intuitive Surgical is 1.05 times less risky than Best Buy. It trades about 0.08 of its potential returns per unit of risk. Best Buy Co is currently generating about 0.01 per unit of risk. If you would invest  20,871  in Intuitive Surgical on December 29, 2023 and sell it today you would earn a total of  19,139  from holding Intuitive Surgical or generate 91.7% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Intuitive Surgical  vs.  Best Buy Co

 Performance 
       Timeline  
Intuitive Surgical 

Risk-Adjusted Performance

12 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Intuitive Surgical are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Intuitive Surgical reported solid returns over the last few months and may actually be approaching a breakup point.
Best Buy 

Risk-Adjusted Performance

4 of 100

 
Low
 
High
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Best Buy Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating fundamental drivers, Best Buy may actually be approaching a critical reversion point that can send shares even higher in April 2024.

Intuitive Surgical and Best Buy Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Intuitive Surgical and Best Buy

The main advantage of trading using opposite Intuitive Surgical and Best Buy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intuitive Surgical position performs unexpectedly, Best Buy 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 Best Buy will offset losses from the drop in Best Buy's long position.
The idea behind Intuitive Surgical and Best Buy Co 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.

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