Correlation Between Danaher and Sonic Healthcare
Can any of the company-specific risk be diversified away by investing in both Danaher and Sonic Healthcare 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 Sonic Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Danaher and Sonic Healthcare Limited, you can compare the effects of market volatilities on Danaher and Sonic Healthcare 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 Sonic Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Danaher and Sonic Healthcare.
Diversification Opportunities for Danaher and Sonic Healthcare
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Danaher and Sonic is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Danaher and Sonic Healthcare Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonic Healthcare 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 Sonic Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sonic Healthcare has no effect on the direction of Danaher i.e., Danaher and Sonic Healthcare go up and down completely randomly.
Pair Corralation between Danaher and Sonic Healthcare
Considering the 90-day investment horizon Danaher is expected to under-perform the Sonic Healthcare. But the stock apears to be less risky and, when comparing its historical volatility, Danaher is 2.19 times less risky than Sonic Healthcare. The stock trades about -0.16 of its potential returns per unit of risk. The Sonic Healthcare Limited is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 1,853 in Sonic Healthcare Limited on September 12, 2024 and sell it today you would lose (118.00) from holding Sonic Healthcare Limited or give up 6.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Danaher vs. Sonic Healthcare Limited
Performance |
| Timeline |
| Danaher |
| Sonic Healthcare |
Danaher and Sonic Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Danaher and Sonic Healthcare
The main advantage of trading using opposite Danaher and Sonic Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Danaher position performs unexpectedly, Sonic Healthcare 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 Sonic Healthcare will offset losses from the drop in Sonic Healthcare's long position.| Danaher vs. Agilent Technologies | Danaher vs. Illumina | Danaher vs. IDEXX Laboratories | Danaher vs. Waters |
| Sonic Healthcare vs. Lonza Group AG | Sonic Healthcare vs. Personalis | Sonic Healthcare vs. Applied DNA Sciences | Sonic Healthcare vs. ProPhase Labs |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device |