Correlation Between METTLER TOLEDO and Bright Horizons

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Can any of the company-specific risk be diversified away by investing in both METTLER TOLEDO and Bright Horizons 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 Bright Horizons into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between METTLER TOLEDO INTL and Bright Horizons Family, you can compare the effects of market volatilities on METTLER TOLEDO and Bright Horizons 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 Bright Horizons. Check out your portfolio center. Please also check ongoing floating volatility patterns of METTLER TOLEDO and Bright Horizons.

Diversification Opportunities for METTLER TOLEDO and Bright Horizons

0.71
  Correlation Coefficient

Poor diversification

The 3 months correlation between METTLER and Bright is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding METTLER TOLEDO INTL and Bright Horizons Family in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bright Horizons Family 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 INTL are associated (or correlated) with Bright Horizons. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bright Horizons Family has no effect on the direction of METTLER TOLEDO i.e., METTLER TOLEDO and Bright Horizons go up and down completely randomly.

Pair Corralation between METTLER TOLEDO and Bright Horizons

Assuming the 90 days trading horizon METTLER TOLEDO INTL is expected to generate 0.65 times more return on investment than Bright Horizons. However, METTLER TOLEDO INTL is 1.55 times less risky than Bright Horizons. It trades about 0.07 of its potential returns per unit of risk. Bright Horizons Family is currently generating about -0.02 per unit of risk. If you would invest  118,250  in METTLER TOLEDO INTL on September 13, 2024 and sell it today you would earn a total of  2,300  from holding METTLER TOLEDO INTL or generate 1.95% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

METTLER TOLEDO INTL  vs.  Bright Horizons Family

 Performance 
       Timeline  
METTLER TOLEDO INTL 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days METTLER TOLEDO INTL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, METTLER TOLEDO is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.
Bright Horizons Family 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Bright Horizons Family has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

METTLER TOLEDO and Bright Horizons Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with METTLER TOLEDO and Bright Horizons

The main advantage of trading using opposite METTLER TOLEDO and Bright Horizons positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if METTLER TOLEDO position performs unexpectedly, Bright Horizons 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 Bright Horizons will offset losses from the drop in Bright Horizons' long position.
The idea behind METTLER TOLEDO INTL and Bright Horizons Family 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.

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