Correlation Between Edwards Lifesciences and Veeva Systems

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

Diversification Opportunities for Edwards Lifesciences and Veeva Systems

0.34

Correlation Coefficient

Edwards Lifesciences  Veeva Systems

Weak diversification

The 3 months correlation between Edwards and Veeva is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Edwards Lifesciences Corp and Veeva Systems Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veeva Systems Class 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 Veeva Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Veeva Systems Class has no effect on the direction of Edwards Lifesciences i.e., Edwards Lifesciences and Veeva Systems go up and down completely randomly.

Pair Corralation between Edwards Lifesciences and Veeva Systems

Allowing for the 90-day total investment horizon Edwards Lifesciences is expected to generate 2.85 times less return on investment than Veeva Systems. But when comparing it to its historical volatility, Edwards Lifesciences Corp is 2.06 times less risky than Veeva Systems. It trades about 0.09 of its potential returns per unit of risk. Veeva Systems Class is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  23,832  in Veeva Systems Class on May 7, 2025 and sell it today you would earn a total of  4,696  from holding Veeva Systems Class or generate 19.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Edwards Lifesciences Corp  vs.  Veeva Systems Class

Edwards Lifesciences Corp

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Edwards Lifesciences Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Edwards Lifesciences may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Veeva Systems Class

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Veeva Systems Class are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain technical and fundamental indicators, Veeva Systems showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Edwards Lifesciences and Veeva Systems

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

The idea behind Edwards Lifesciences Corp and Veeva Systems Class 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.