Correlation Between Mesa Laboratories and Charles River

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Can any of the company-specific risk be diversified away by investing in both Mesa Laboratories and Charles River 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 Mesa Laboratories and Charles River into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mesa Laboratories and Charles River Laboratories, you can compare the effects of market volatilities on Mesa Laboratories and Charles River 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 Mesa Laboratories with a short position of Charles River. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mesa Laboratories and Charles River.

Diversification Opportunities for Mesa Laboratories and Charles River

MesaCharlesDiversified AwayMesaCharlesDiversified Away100%
-0.69
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Mesa and Charles is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Mesa Laboratories and Charles River Laboratories in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charles River Labora and Mesa 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 Mesa Laboratories are associated (or correlated) with Charles River. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charles River Labora has no effect on the direction of Mesa Laboratories i.e., Mesa Laboratories and Charles River go up and down completely randomly.

Pair Corralation between Mesa Laboratories and Charles River

Given the investment horizon of 90 days Mesa Laboratories is expected to generate 1.34 times more return on investment than Charles River. However, Mesa Laboratories is 1.34 times more volatile than Charles River Laboratories. It trades about 0.03 of its potential returns per unit of risk. Charles River Laboratories is currently generating about -0.02 per unit of risk. If you would invest  14,047  in Mesa Laboratories on November 25, 2024 and sell it today you would earn a total of  123.00  from holding Mesa Laboratories or generate 0.88% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Mesa Laboratories  vs.  Charles River Laboratories

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -20-10010203040
JavaScript chart by amCharts 3.21.15MLAB CRL
       Timeline  
Mesa Laboratories 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Mesa Laboratories are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Mesa Laboratories sustained solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb100110120130140150
Charles River Labora 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Charles River Laboratories has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in March 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb150160170180190200

Mesa Laboratories and Charles River Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-8.63-6.47-4.3-2.130.02.334.77.069.43 0.020.040.060.08
JavaScript chart by amCharts 3.21.15MLAB CRL
       Returns  

Pair Trading with Mesa Laboratories and Charles River

The main advantage of trading using opposite Mesa Laboratories and Charles River positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mesa Laboratories position performs unexpectedly, Charles River 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 Charles River will offset losses from the drop in Charles River's long position.
The idea behind Mesa Laboratories and Charles River Laboratories pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.

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