Correlation Between National Retail and INTUITIVE SURGICAL

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

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

Diversification Opportunities for National Retail and INTUITIVE SURGICAL

-0.57

Correlation Coefficient

National Retail  INTUITIVE SURGICAL

Excellent diversification

The 3 months correlation between National and INTUITIVE is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding National Retail Properties and INTUITIVE SURGICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTUITIVE SURGICAL and National Retail 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 National Retail Properties 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 National Retail i.e., National Retail and INTUITIVE SURGICAL go up and down completely randomly.

Pair Corralation between National Retail and INTUITIVE SURGICAL

Assuming the 90 days trading horizon National Retail Properties is expected to under-perform the INTUITIVE SURGICAL. But the stock apears to be less risky and, when comparing its historical volatility, National Retail Properties is 1.14 times less risky than INTUITIVE SURGICAL. The stock trades about -0.06 of its potential returns per unit of risk. The INTUITIVE SURGICAL is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  44,115  in INTUITIVE SURGICAL on September 16, 2024 and sell it today you would earn a total of  7,685  from holding INTUITIVE SURGICAL or generate 17.42% return on investment over 90 days.

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

National Retail Properties  vs.  INTUITIVE SURGICAL

National Retail Prop

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National Retail Properties has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, National Retail is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

INTUITIVE SURGICAL

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in INTUITIVE SURGICAL are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile 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 National Retail and INTUITIVE SURGICAL

The main advantage of trading using opposite National Retail and INTUITIVE SURGICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Retail 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 National Retail Properties 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.