Correlation Between EXACT Sciences and Waters
Can any of the company-specific risk be diversified away by investing in both EXACT Sciences 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 EXACT Sciences and Waters into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EXACT Sciences and Waters, you can compare the effects of market volatilities on EXACT Sciences 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 EXACT Sciences with a short position of Waters. Check out your portfolio center. Please also check ongoing floating volatility patterns of EXACT Sciences and Waters.
Diversification Opportunities for EXACT Sciences and Waters
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between EXACT and Waters is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding EXACT Sciences and Waters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waters and EXACT Sciences 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 EXACT Sciences 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 EXACT Sciences i.e., EXACT Sciences and Waters go up and down completely randomly.
Pair Corralation between EXACT Sciences and Waters
Given the investment horizon of 90 days EXACT Sciences is expected to under-perform the Waters. In addition to that, EXACT Sciences is 1.23 times more volatile than Waters. It trades about -0.15 of its total potential returns per unit of risk. Waters is currently generating about 0.17 per unit of volatility. If you would invest 32,551 in Waters on August 27, 2024 and sell it today you would earn a total of 5,265 from holding Waters or generate 16.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EXACT Sciences vs. Waters
Performance |
| Timeline |
| EXACT Sciences |
| Waters |
EXACT Sciences and Waters Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EXACT Sciences and Waters
The main advantage of trading using opposite EXACT Sciences and Waters positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EXACT Sciences 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.| EXACT Sciences vs. Eliem Therapeutics | EXACT Sciences vs. HCW Biologics | EXACT Sciences vs. Scpharmaceuticals | EXACT Sciences vs. Milestone Pharmaceuticals |
| Waters vs. IDEXX Laboratories | Waters vs. IQVIA Holdings | Waters vs. Charles River Laboratories | Waters vs. Revvity |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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