Correlation Between Ion Beam and Edwards Lifesciences

Can any of the company-specific risk be diversified away by investing in both Ion Beam and Edwards Lifesciences 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 Ion Beam and Edwards Lifesciences into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ion Beam Applications and Edwards Lifesciences Corp, you can compare the effects of market volatilities on Ion Beam and Edwards Lifesciences 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 Ion Beam with a short position of Edwards Lifesciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ion Beam and Edwards Lifesciences.

Diversification Opportunities for Ion Beam and Edwards Lifesciences

-0.08

Correlation Coefficient

Ion Beam  Edwards Lifesciences

Good diversification

The 3 months correlation between Ion and Edwards is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Ion Beam Applications and Edwards Lifesciences Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edwards Lifesciences Corp and Ion Beam 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 Ion Beam Applications are associated (or correlated) with Edwards Lifesciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edwards Lifesciences Corp has no effect on the direction of Ion Beam i.e., Ion Beam and Edwards Lifesciences go up and down completely randomly.

Pair Corralation between Ion Beam and Edwards Lifesciences

Assuming the 90 days horizon Ion Beam Applications is expected to under-perform the Edwards Lifesciences. In addition to that, Ion Beam is 1.18 times more volatile than Edwards Lifesciences Corp. It trades about -0.03 of its total potential returns per unit of risk. Edwards Lifesciences Corp is currently generating about 0.2 per unit of volatility. If you would invest  6,954  in Edwards Lifesciences Corp on September 21, 2024 and sell it today you would earn a total of  527.00  from holding Edwards Lifesciences Corp or generate 7.58% return on investment over 90 days.

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

Ion Beam Applications  vs.  Edwards Lifesciences Corp

Ion Beam Applications

Risk-Adjusted Performance

0 of 100

Very Weak

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

Edwards Lifesciences Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Edwards Lifesciences Corp are ranked lower than 8 (%) 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 January 2025.

Pair Trading with Ion Beam and Edwards Lifesciences

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

The idea behind Ion Beam Applications and Edwards Lifesciences Corp 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.