Correlation Between Charles River and Waters
Can any of the company-specific risk be diversified away by investing in both Charles River and Waters 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 Charles River and Waters into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Charles River Laboratories and Waters, you can compare the effects of market volatilities on Charles River and Waters 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 Charles River with a short position of Waters. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charles River and Waters.
Diversification Opportunities for Charles River and Waters
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Charles and Waters is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Charles River Laboratories and Waters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waters and Charles River 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 Charles River Laboratories are associated (or correlated) with Waters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waters has no effect on the direction of Charles River i.e., Charles River and Waters go up and down completely randomly.
Pair Corralation between Charles River and Waters
Considering the 90-day investment horizon Charles River is expected to generate 1.86 times less return on investment than Waters. But when comparing it to its historical volatility, Charles River Laboratories is 1.22 times less risky than Waters. It trades about 0.1 of its potential returns per unit of risk. Waters is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 32,455 in Waters on August 26, 2024 and sell it today you would earn a total of 4,892 from holding Waters or generate 15.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Charles River Laboratories vs. Waters
Performance |
| Timeline |
| Charles River Labora |
| Waters |
Charles River and Waters Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charles River and Waters
The main advantage of trading using opposite Charles River and Waters positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charles River position performs unexpectedly, Waters 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 Waters will offset losses from the drop in Waters' long position.| Charles River vs. Fonar | Charles River vs. Burning Rock Biotech | Charles River vs. Sera Prognostics | Charles River vs. Exagen Inc |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Positions Ratings 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 | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation |