Correlation Between Intuitive Surgical and SBM OFFSHORE

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

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

Diversification Opportunities for Intuitive Surgical and SBM OFFSHORE

0.67

Correlation Coefficient

Intuitive Surgical  SBM OFFSHORE

Poor diversification

The 3 months correlation between Intuitive and SBM is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Intuitive Surgical and SBM OFFSHORE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBM OFFSHORE 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 SBM OFFSHORE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SBM OFFSHORE has no effect on the direction of Intuitive Surgical i.e., Intuitive Surgical and SBM OFFSHORE go up and down completely randomly.

Pair Corralation between Intuitive Surgical and SBM OFFSHORE

Assuming the 90 days trading horizon Intuitive Surgical is expected to generate 1.18 times more return on investment than SBM OFFSHORE. However, Intuitive Surgical is 1.18 times more volatile than SBM OFFSHORE. It trades about 0.15 of its potential returns per unit of risk. SBM OFFSHORE is currently generating about 0.07 per unit of risk. If you would invest  44,230  in Intuitive Surgical on September 13, 2024 and sell it today you would earn a total of  7,520  from holding Intuitive Surgical or generate 17.0% return on investment over 90 days.

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

Intuitive Surgical  vs.  SBM OFFSHORE

Intuitive Surgical

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Intuitive Surgical are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady forward indicators, Intuitive Surgical reported solid returns over the last few months and may actually be approaching a breakup point.

SBM OFFSHORE

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SBM OFFSHORE are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, SBM OFFSHORE may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Intuitive Surgical and SBM OFFSHORE

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

The idea behind Intuitive Surgical and SBM OFFSHORE 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.