Correlation Between Mettler Toledo and ICON PLC
Can any of the company-specific risk be diversified away by investing in both Mettler Toledo 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 Mettler Toledo and ICON PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mettler Toledo International and ICON PLC, you can compare the effects of market volatilities on Mettler Toledo 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 Mettler Toledo with a short position of ICON PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mettler Toledo and ICON PLC.
Diversification Opportunities for Mettler Toledo and ICON PLC
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mettler and ICON is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Mettler Toledo International and ICON PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ICON PLC and Mettler Toledo 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 Mettler Toledo International 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 Mettler Toledo i.e., Mettler Toledo and ICON PLC go up and down completely randomly.
Pair Corralation between Mettler Toledo and ICON PLC
Considering the 90-day investment horizon Mettler Toledo International is expected to generate 0.67 times more return on investment than ICON PLC. However, Mettler Toledo International is 1.49 times less risky than ICON PLC. It trades about -0.07 of its potential returns per unit of risk. ICON PLC is currently generating about -0.1 per unit of risk. If you would invest 145,455 in Mettler Toledo International on August 24, 2024 and sell it today you would lose (25,773) from holding Mettler Toledo International or give up 17.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mettler Toledo International vs. ICON PLC
Performance |
| Timeline |
| Mettler Toledo Inter |
| ICON PLC |
Mettler Toledo and ICON PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mettler Toledo and ICON PLC
The main advantage of trading using opposite Mettler Toledo and ICON PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mettler Toledo 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.| Mettler Toledo vs. IDEXX Laboratories | Mettler Toledo vs. Charles River Laboratories | Mettler Toledo vs. Agilent Technologies | Mettler Toledo vs. Revvity |
| ICON PLC vs. Mettler Toledo International | ICON PLC vs. Charles River Laboratories | ICON PLC vs. Laboratory of | ICON PLC vs. Neogen |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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