Correlation Between Danaher and Thermo Fisher
Can any of the company-specific risk be diversified away by investing in both Danaher and Thermo Fisher 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 Danaher and Thermo Fisher into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Danaher and Thermo Fisher Scientific, you can compare the effects of market volatilities on Danaher and Thermo Fisher 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 Danaher with a short position of Thermo Fisher. Check out your portfolio center. Please also check ongoing floating volatility patterns of Danaher and Thermo Fisher.
Diversification Opportunities for Danaher and Thermo Fisher
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Danaher and Thermo is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Danaher and Thermo Fisher Scientific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thermo Fisher Scientific and Danaher 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 Danaher are associated (or correlated) with Thermo Fisher. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thermo Fisher Scientific has no effect on the direction of Danaher i.e., Danaher and Thermo Fisher go up and down completely randomly.
Pair Corralation between Danaher and Thermo Fisher
Assuming the 90 days horizon Danaher is expected to generate 1.05 times more return on investment than Thermo Fisher. However, Danaher is 1.05 times more volatile than Thermo Fisher Scientific. It trades about 0.0 of its potential returns per unit of risk. Thermo Fisher Scientific is currently generating about -0.02 per unit of risk. If you would invest 23,470 in Danaher on September 1, 2024 and sell it today you would lose (745.00) from holding Danaher or give up 3.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Danaher vs. Thermo Fisher Scientific
Performance |
| Timeline |
| Danaher |
| Thermo Fisher Scientific |
Danaher and Thermo Fisher Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Danaher and Thermo Fisher
The main advantage of trading using opposite Danaher and Thermo Fisher positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Danaher position performs unexpectedly, Thermo Fisher 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 Thermo Fisher will offset losses from the drop in Thermo Fisher's long position.| Danaher vs. WuXi AppTec Co | Danaher vs. Danaher | Danaher vs. SIEMENS HEALTH ADR050 | Danaher vs. DexCom Inc |
| Thermo Fisher vs. MagnaChip Semiconductor Corp | Thermo Fisher vs. TOREX SEMICONDUCTOR LTD | Thermo Fisher vs. X FAB Silicon Foundries | Thermo Fisher vs. Wayside Technology Group |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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