Correlation Between Mettler Toledo and Waters
Can any of the company-specific risk be diversified away by investing in both Mettler Toledo 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 Mettler Toledo and Waters 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 Waters, you can compare the effects of market volatilities on Mettler Toledo 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 Mettler Toledo with a short position of Waters. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mettler Toledo and Waters.
Diversification Opportunities for Mettler Toledo and Waters
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Mettler and Waters is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Mettler Toledo International and Waters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waters 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 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 Mettler Toledo i.e., Mettler Toledo and Waters go up and down completely randomly.
Pair Corralation between Mettler Toledo and Waters
Considering the 90-day investment horizon Mettler Toledo International is expected to under-perform the Waters. But the stock apears to be less risky and, when comparing its historical volatility, Mettler Toledo International is 1.92 times less risky than Waters. The stock trades about -0.26 of its potential returns per unit of risk. The Waters is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 33,943 in Waters on August 23, 2024 and sell it today you would earn a total of 1,834 from holding Waters or generate 5.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mettler Toledo International vs. Waters
Performance |
| Timeline |
| Mettler Toledo Inter |
| Waters |
Mettler Toledo and Waters Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mettler Toledo and Waters
The main advantage of trading using opposite Mettler Toledo and Waters positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mettler Toledo 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.| Mettler Toledo vs. IDEXX Laboratories | Mettler Toledo vs. Charles River Laboratories | Mettler Toledo vs. Agilent Technologies | Mettler Toledo vs. Revvity |
| Waters vs. IDEXX Laboratories | Waters vs. IQVIA Holdings | Waters vs. Charles River Laboratories | Waters vs. Revvity |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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