Correlation Between ICON PLC and Sotera Health
Can any of the company-specific risk be diversified away by investing in both ICON PLC and Sotera Health 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 Sotera Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ICON PLC and Sotera Health Co, you can compare the effects of market volatilities on ICON PLC and Sotera Health 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 Sotera Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of ICON PLC and Sotera Health.
Diversification Opportunities for ICON PLC and Sotera Health
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ICON and Sotera is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding ICON PLC and Sotera Health Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sotera Health 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 Sotera Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sotera Health has no effect on the direction of ICON PLC i.e., ICON PLC and Sotera Health go up and down completely randomly.
Pair Corralation between ICON PLC and Sotera Health
Given the investment horizon of 90 days ICON PLC is expected to generate 1.11 times more return on investment than Sotera Health. However, ICON PLC is 1.11 times more volatile than Sotera Health Co. It trades about -0.12 of its potential returns per unit of risk. Sotera Health Co is currently generating about -0.4 per unit of risk. If you would invest 23,050 in ICON PLC on August 27, 2024 and sell it today you would lose (1,625) from holding ICON PLC or give up 7.05% 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. Sotera Health Co
Performance |
| Timeline |
| ICON PLC |
| Sotera Health |
ICON PLC and Sotera Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ICON PLC and Sotera Health
The main advantage of trading using opposite ICON PLC and Sotera Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ICON PLC position performs unexpectedly, Sotera Health 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 Sotera Health will offset losses from the drop in Sotera Health'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 |
| Sotera Health vs. Qiagen NV | Sotera Health vs. Aclaris Therapeutics | Sotera Health vs. Neogen | Sotera Health vs. RadNet Inc |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume |