Correlation Between ICON PLC and EXACT Sciences
Can any of the company-specific risk be diversified away by investing in both ICON PLC and EXACT Sciences 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 ICON PLC and EXACT Sciences into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ICON PLC and EXACT Sciences, you can compare the effects of market volatilities on ICON PLC and EXACT Sciences 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 ICON PLC with a short position of EXACT Sciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of ICON PLC and EXACT Sciences.
Diversification Opportunities for ICON PLC and EXACT Sciences
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ICON and EXACT is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding ICON PLC and EXACT Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EXACT Sciences and ICON PLC 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 ICON PLC are associated (or correlated) with EXACT Sciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EXACT Sciences has no effect on the direction of ICON PLC i.e., ICON PLC and EXACT Sciences go up and down completely randomly.
Pair Corralation between ICON PLC and EXACT Sciences
Given the investment horizon of 90 days ICON PLC is expected to generate 0.47 times more return on investment than EXACT Sciences. However, ICON PLC is 2.15 times less risky than EXACT Sciences. It trades about -0.09 of its potential returns per unit of risk. EXACT Sciences is currently generating about -0.15 per unit of risk. If you would invest 23,050 in ICON PLC on August 27, 2024 and sell it today you would lose (1,374) from holding ICON PLC or give up 5.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ICON PLC vs. EXACT Sciences
Performance |
| Timeline |
| ICON PLC |
| EXACT Sciences |
ICON PLC and EXACT Sciences Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ICON PLC and EXACT Sciences
The main advantage of trading using opposite ICON PLC and EXACT Sciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ICON PLC position performs unexpectedly, EXACT Sciences 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 EXACT Sciences will offset losses from the drop in EXACT Sciences' long position.| ICON PLC vs. Mettler Toledo International | ICON PLC vs. Charles River Laboratories | ICON PLC vs. Laboratory of | ICON PLC vs. IQVIA Holdings |
| EXACT Sciences vs. Eliem Therapeutics | EXACT Sciences vs. HCW Biologics | EXACT Sciences vs. Scpharmaceuticals | EXACT Sciences vs. Milestone Pharmaceuticals |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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