Correlation Between Sonic Healthcare and ICON PLC
Can any of the company-specific risk be diversified away by investing in both Sonic Healthcare 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 Sonic Healthcare and ICON PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sonic Healthcare Ltd and ICON PLC, you can compare the effects of market volatilities on Sonic Healthcare 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 Sonic Healthcare with a short position of ICON PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonic Healthcare and ICON PLC.
Diversification Opportunities for Sonic Healthcare and ICON PLC
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sonic and ICON is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Sonic Healthcare Ltd and ICON PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ICON PLC and Sonic Healthcare 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 Sonic Healthcare Ltd 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 Sonic Healthcare i.e., Sonic Healthcare and ICON PLC go up and down completely randomly.
Pair Corralation between Sonic Healthcare and ICON PLC
Assuming the 90 days horizon Sonic Healthcare Ltd is expected to generate 0.72 times more return on investment than ICON PLC. However, Sonic Healthcare Ltd is 1.38 times less risky than ICON PLC. It trades about 0.02 of its potential returns per unit of risk. ICON PLC is currently generating about -0.09 per unit of risk. If you would invest 1,785 in Sonic Healthcare Ltd on September 1, 2024 and sell it today you would earn a total of 60.00 from holding Sonic Healthcare Ltd or generate 3.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.47% |
| Values | Daily Returns |
Sonic Healthcare Ltd vs. ICON PLC
Performance |
| Timeline |
| Sonic Healthcare |
| ICON PLC |
Sonic Healthcare and ICON PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sonic Healthcare and ICON PLC
The main advantage of trading using opposite Sonic Healthcare and ICON PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sonic Healthcare 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.| Sonic Healthcare vs. China New Energy | Sonic Healthcare vs. Lonza Group | Sonic Healthcare vs. Charles River Laboratories | Sonic Healthcare vs. Qiagen NV |
| ICON PLC vs. Mettler Toledo International | ICON PLC vs. Charles River Laboratories | ICON PLC vs. Laboratory of | ICON PLC vs. IQVIA Holdings |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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