Correlation Between Laboratory and Cencora
Can any of the company-specific risk be diversified away by investing in both Laboratory and Cencora 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 Laboratory and Cencora into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Laboratory of and Cencora, you can compare the effects of market volatilities on Laboratory and Cencora 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 Laboratory with a short position of Cencora. Check out your portfolio center. Please also check ongoing floating volatility patterns of Laboratory and Cencora.
Diversification Opportunities for Laboratory and Cencora
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Laboratory and Cencora is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Laboratory of and Cencora in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cencora and Laboratory 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 Laboratory of are associated (or correlated) with Cencora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cencora has no effect on the direction of Laboratory i.e., Laboratory and Cencora go up and down completely randomly.
Pair Corralation between Laboratory and Cencora
Allowing for the 90-day total investment horizon Laboratory of is expected to generate 0.83 times more return on investment than Cencora. However, Laboratory of is 1.21 times less risky than Cencora. It trades about 0.23 of its potential returns per unit of risk. Cencora is currently generating about 0.16 per unit of risk. If you would invest 22,738 in Laboratory of on August 28, 2024 and sell it today you would earn a total of 1,391 from holding Laboratory of or generate 6.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Laboratory of vs. Cencora
Performance |
| Timeline |
| Laboratory |
| Cencora |
Laboratory and Cencora Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Laboratory and Cencora
The main advantage of trading using opposite Laboratory and Cencora positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Laboratory position performs unexpectedly, Cencora 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 Cencora will offset losses from the drop in Cencora's long position.| Laboratory vs. Quest Diagnostics Incorporated | Laboratory vs. Waters | Laboratory vs. Universal Health Services | Laboratory vs. Humana Inc |
| Cencora vs. Vita Coco | Cencora vs. RadNet Inc | Cencora vs. Thai Beverage PCL | Cencora vs. Compania Cervecerias Unidas |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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