Correlation Between FEMALE HEALTH and THERMO FISHER
Can any of the company-specific risk be diversified away by investing in both FEMALE HEALTH 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 FEMALE HEALTH and THERMO FISHER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FEMALE HEALTH and THERMO FISHER SCIEN, you can compare the effects of market volatilities on FEMALE HEALTH 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 FEMALE HEALTH with a short position of THERMO FISHER. Check out your portfolio center. Please also check ongoing floating volatility patterns of FEMALE HEALTH and THERMO FISHER.
Diversification Opportunities for FEMALE HEALTH and THERMO FISHER
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FEMALE and THERMO is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding FEMALE HEALTH and THERMO FISHER SCIEN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THERMO FISHER SCIEN and FEMALE HEALTH 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 FEMALE HEALTH 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 SCIEN has no effect on the direction of FEMALE HEALTH i.e., FEMALE HEALTH and THERMO FISHER go up and down completely randomly.
Pair Corralation between FEMALE HEALTH and THERMO FISHER
Assuming the 90 days trading horizon FEMALE HEALTH is expected to under-perform the THERMO FISHER. In addition to that, FEMALE HEALTH is 2.25 times more volatile than THERMO FISHER SCIEN. It trades about -0.45 of its total potential returns per unit of risk. THERMO FISHER SCIEN is currently generating about -0.22 per unit of volatility. If you would invest 53,220 in THERMO FISHER SCIEN on August 24, 2024 and sell it today you would lose (4,115) from holding THERMO FISHER SCIEN or give up 7.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FEMALE HEALTH vs. THERMO FISHER SCIEN
Performance |
| Timeline |
| FEMALE HEALTH |
| THERMO FISHER SCIEN |
FEMALE HEALTH and THERMO FISHER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FEMALE HEALTH and THERMO FISHER
The main advantage of trading using opposite FEMALE HEALTH and THERMO FISHER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FEMALE HEALTH 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.| FEMALE HEALTH vs. Apple Inc | FEMALE HEALTH vs. Apple Inc | FEMALE HEALTH vs. Apple Inc | FEMALE HEALTH vs. Apple Inc |
| THERMO FISHER vs. ALBIS LEASING AG | THERMO FISHER vs. OFFICE DEPOT | THERMO FISHER vs. MAVEN WIRELESS SWEDEN | THERMO FISHER vs. FUYO GENERAL LEASE |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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