Correlation Between Medpace Holdings and ICON PLC
Can any of the company-specific risk be diversified away by investing in both Medpace Holdings and ICON PLC 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 Medpace Holdings and ICON PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Medpace Holdings and ICON PLC, you can compare the effects of market volatilities on Medpace Holdings and ICON PLC 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 Medpace Holdings with a short position of ICON PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medpace Holdings and ICON PLC.
Diversification Opportunities for Medpace Holdings and ICON PLC
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Medpace and ICON is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Medpace Holdings and ICON PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ICON PLC and Medpace Holdings 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 Medpace Holdings are associated (or correlated) with ICON PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ICON PLC has no effect on the direction of Medpace Holdings i.e., Medpace Holdings and ICON PLC go up and down completely randomly.
Pair Corralation between Medpace Holdings and ICON PLC
Given the investment horizon of 90 days Medpace Holdings is expected to generate 0.85 times more return on investment than ICON PLC. However, Medpace Holdings is 1.18 times less risky than ICON PLC. It trades about 0.0 of its potential returns per unit of risk. ICON PLC is currently generating about -0.16 per unit of risk. If you would invest 34,990 in Medpace Holdings on August 31, 2024 and sell it today you would lose (1,094) from holding Medpace Holdings or give up 3.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Medpace Holdings vs. ICON PLC
Performance |
| Timeline |
| Medpace Holdings |
| ICON PLC |
Medpace Holdings and ICON PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Medpace Holdings and ICON PLC
The main advantage of trading using opposite Medpace Holdings and ICON PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medpace Holdings position performs unexpectedly, ICON PLC 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 ICON PLC will offset losses from the drop in ICON PLC's long position.| Medpace Holdings vs. IQVIA Holdings | Medpace Holdings vs. Neogen | Medpace Holdings vs. ICON PLC | Medpace Holdings vs. Qiagen NV |
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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