Correlation Between IDEXX Laboratories and Lonza Group
Can any of the company-specific risk be diversified away by investing in both IDEXX Laboratories and Lonza Group 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 IDEXX Laboratories and Lonza Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IDEXX Laboratories and Lonza Group AG, you can compare the effects of market volatilities on IDEXX Laboratories and Lonza Group 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 IDEXX Laboratories with a short position of Lonza Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of IDEXX Laboratories and Lonza Group.
Diversification Opportunities for IDEXX Laboratories and Lonza Group
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IDEXX and Lonza is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding IDEXX Laboratories and Lonza Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lonza Group AG and IDEXX Laboratories 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 IDEXX Laboratories are associated (or correlated) with Lonza Group. 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 AG has no effect on the direction of IDEXX Laboratories i.e., IDEXX Laboratories and Lonza Group go up and down completely randomly.
Pair Corralation between IDEXX Laboratories and Lonza Group
Given the investment horizon of 90 days IDEXX Laboratories is expected to under-perform the Lonza Group. In addition to that, IDEXX Laboratories is 1.0 times more volatile than Lonza Group AG. It trades about -0.07 of its total potential returns per unit of risk. Lonza Group AG is currently generating about 0.06 per unit of volatility. If you would invest 5,386 in Lonza Group AG on September 1, 2024 and sell it today you would earn a total of 577.00 from holding Lonza Group AG or generate 10.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IDEXX Laboratories vs. Lonza Group AG
Performance |
| Timeline |
| IDEXX Laboratories |
| Lonza Group AG |
IDEXX Laboratories and Lonza Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IDEXX Laboratories and Lonza Group
The main advantage of trading using opposite IDEXX Laboratories and Lonza Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IDEXX Laboratories position performs unexpectedly, Lonza Group 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 Group will offset losses from the drop in Lonza Group's long position.| IDEXX Laboratories vs. Waters | IDEXX Laboratories vs. IQVIA Holdings | IDEXX Laboratories vs. Charles River Laboratories | IDEXX Laboratories vs. Revvity |
| Lonza Group vs. Revvity | Lonza Group vs. Sonic Healthcare Limited | Lonza Group vs. Personalis | Lonza Group vs. Applied DNA Sciences |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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