Correlation Between Carrier Global and INTUITIVE SURGICAL

Can any of the company-specific risk be diversified away by investing in both Carrier Global 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 Carrier Global and INTUITIVE SURGICAL into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Carrier Global and INTUITIVE SURGICAL

-0.22

Correlation Coefficient

Carrier Global  INTUITIVE SURGICAL

Very good diversification

The 3 months correlation between Carrier and INTUITIVE is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Carrier Global and INTUITIVE SURGICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTUITIVE SURGICAL and Carrier Global 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 Carrier Global 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 Carrier Global i.e., Carrier Global and INTUITIVE SURGICAL go up and down completely randomly.

Pair Corralation between Carrier Global and INTUITIVE SURGICAL

Assuming the 90 days horizon Carrier Global is expected to under-perform the INTUITIVE SURGICAL. In addition to that, Carrier Global is 1.38 times more volatile than INTUITIVE SURGICAL. It trades about -0.2 of its total potential returns per unit of risk. INTUITIVE SURGICAL is currently generating about -0.06 per unit of volatility. If you would invest  51,250  in INTUITIVE SURGICAL on September 22, 2024 and sell it today you would lose (1,050) from holding INTUITIVE SURGICAL or give up 2.05% of portfolio value over 90 days.

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

Carrier Global  vs.  INTUITIVE SURGICAL

Carrier Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carrier Global has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile 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.

INTUITIVE SURGICAL

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in INTUITIVE SURGICAL are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, INTUITIVE SURGICAL exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Carrier Global and INTUITIVE SURGICAL

The main advantage of trading using opposite Carrier Global and INTUITIVE SURGICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carrier Global 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 Carrier Global 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.

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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.