Correlation Between Intuitive Surgical and Merit Medical

Can any of the company-specific risk be diversified away by investing in both Intuitive Surgical and Merit Medical 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 Merit Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Intuitive Surgical and Merit Medical Systems, you can compare the effects of market volatilities on Intuitive Surgical and Merit Medical 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 Merit Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intuitive Surgical and Merit Medical.

Diversification Opportunities for Intuitive Surgical and Merit Medical

0.72

Correlation Coefficient

Intuitive Surgical  Merit Medical

Poor diversification

The 3 months correlation between Intuitive and Merit is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Intuitive Surgical and Merit Medical Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merit Medical Systems 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 Merit Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merit Medical Systems has no effect on the direction of Intuitive Surgical i.e., Intuitive Surgical and Merit Medical go up and down completely randomly.

Pair Corralation between Intuitive Surgical and Merit Medical

Given the investment horizon of 90 days Intuitive Surgical is expected to under-perform the Merit Medical. But the stock apears to be less risky and, when comparing its historical volatility, Intuitive Surgical is 1.23 times less risky than Merit Medical. The stock trades about -0.1 of its potential returns per unit of risk. The Merit Medical Systems is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  9,395  in Merit Medical Systems on May 3, 2025 and sell it today you would lose (909.00) from holding Merit Medical Systems or give up 9.68% of portfolio value over 90 days.

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

Intuitive Surgical  vs.  Merit Medical Systems

Intuitive Surgical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Intuitive Surgical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Merit Medical Systems

Risk-Adjusted Performance

Very Weak

Over the last 90 days Merit Medical Systems has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Intuitive Surgical and Merit Medical

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

The idea behind Intuitive Surgical and Merit Medical Systems 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.