Correlation Between Lonza Group and Waters
Can any of the company-specific risk be diversified away by investing in both Lonza Group and Waters 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 Lonza Group and Waters into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lonza Group and Waters, you can compare the effects of market volatilities on Lonza Group and Waters 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 Lonza Group with a short position of Waters. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lonza Group and Waters.
Diversification Opportunities for Lonza Group and Waters
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lonza and Waters is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Lonza Group and Waters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waters and Lonza Group 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 Lonza Group are associated (or correlated) with Waters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waters has no effect on the direction of Lonza Group i.e., Lonza Group and Waters go up and down completely randomly.
Pair Corralation between Lonza Group and Waters
Assuming the 90 days horizon Lonza Group is expected to under-perform the Waters. In addition to that, Lonza Group is 1.37 times more volatile than Waters. It trades about -0.01 of its total potential returns per unit of risk. Waters is currently generating about -0.01 per unit of volatility. If you would invest 38,734 in Waters on September 3, 2024 and sell it today you would lose (262.00) from holding Waters or give up 0.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lonza Group vs. Waters
Performance |
| Timeline |
| Lonza Group |
| Waters |
Lonza Group and Waters Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lonza Group and Waters
The main advantage of trading using opposite Lonza Group and Waters positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lonza Group position performs unexpectedly, Waters 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 Waters will offset losses from the drop in Waters' long position.| Lonza Group vs. China New Energy | Lonza Group vs. Sonic Healthcare Ltd | Lonza Group vs. Charles River Laboratories | Lonza Group 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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