Correlation Between ICON PLC and Lonza
Can any of the company-specific risk be diversified away by investing in both ICON PLC and Lonza 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 Lonza into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ICON PLC and Lonza Group, you can compare the effects of market volatilities on ICON PLC and Lonza 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 Lonza. Check out your portfolio center. Please also check ongoing floating volatility patterns of ICON PLC and Lonza.
Diversification Opportunities for ICON PLC and Lonza
Very weak diversification
The 3 months correlation between ICON and Lonza is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding ICON PLC and Lonza Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lonza Group 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 Lonza. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lonza Group has no effect on the direction of ICON PLC i.e., ICON PLC and Lonza go up and down completely randomly.
Pair Corralation between ICON PLC and Lonza
Given the investment horizon of 90 days ICON PLC is expected to under-perform the Lonza. But the stock apears to be less risky and, when comparing its historical volatility, ICON PLC is 1.1 times less risky than Lonza. The stock trades about -0.08 of its potential returns per unit of risk. The Lonza Group is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 60,460 in Lonza Group on September 1, 2024 and sell it today you would earn a total of 215.00 from holding Lonza Group or generate 0.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
ICON PLC vs. Lonza Group
Performance |
| Timeline |
| ICON PLC |
| Lonza Group |
ICON PLC and Lonza Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ICON PLC and Lonza
The main advantage of trading using opposite ICON PLC and Lonza positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ICON PLC position performs unexpectedly, Lonza 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 Lonza will offset losses from the drop in Lonza's long position.| ICON PLC vs. Mettler Toledo International | ICON PLC vs. Charles River Laboratories | ICON PLC vs. Laboratory of | ICON PLC vs. IQVIA Holdings |
| Lonza vs. China New Energy | Lonza vs. Sonic Healthcare Ltd | Lonza vs. Charles River Laboratories | Lonza vs. Qiagen NV |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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