Correlation Between Pro Dex and Intuitive Surgical

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

By analyzing existing cross correlation between Pro Dex and Intuitive Surgical, you can compare the effects of market volatilities on Pro Dex and Intuitive Surgical 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 Pro Dex with a short position of Intuitive Surgical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pro Dex and Intuitive Surgical.

Diversification Opportunities for Pro Dex and Intuitive Surgical

-0.85

Correlation Coefficient

Pro Dex  Intuitive Surgical

Pay attention - limited upside

The 3 months correlation between Pro and Intuitive is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Pro Dex and Intuitive Surgical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intuitive Surgical and Pro Dex 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 Pro Dex are associated (or correlated) with Intuitive Surgical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intuitive Surgical has no effect on the direction of Pro Dex i.e., Pro Dex and Intuitive Surgical go up and down completely randomly.

Pair Corralation between Pro Dex and Intuitive Surgical

Given the investment horizon of 90 days Pro Dex is expected to generate 1.65 times more return on investment than Intuitive Surgical. However, Pro Dex is 1.65 times more volatile than Intuitive Surgical. It trades about 0.18 of its potential returns per unit of risk. Intuitive Surgical is currently generating about -0.07 per unit of risk. If you would invest  4,127  in Pro Dex on January 25, 2025 and sell it today you would earn a total of  2,565  from holding Pro Dex or generate 62.15% return on investment over 90 days.

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

Pro Dex  vs.  Intuitive Surgical

Pro Dex

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pro Dex are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Pro Dex showed solid returns over the last few months and may actually be approaching a breakup point.

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 unfluctuating performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in May 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Pro Dex and Intuitive Surgical

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

The idea behind Pro Dex and Intuitive Surgical 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.