Correlation Between Thermo Fisher and Lonza Group
Can any of the company-specific risk be diversified away by investing in both Thermo Fisher and Lonza Group 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 Thermo Fisher and Lonza Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thermo Fisher Scientific and Lonza Group, you can compare the effects of market volatilities on Thermo Fisher and Lonza Group 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 Thermo Fisher with a short position of Lonza Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thermo Fisher and Lonza Group.
Diversification Opportunities for Thermo Fisher and Lonza Group
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Thermo and Lonza is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Thermo Fisher Scientific and Lonza Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lonza Group and Thermo Fisher 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 Thermo Fisher Scientific are associated (or correlated) with Lonza Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lonza Group has no effect on the direction of Thermo Fisher i.e., Thermo Fisher and Lonza Group go up and down completely randomly.
Pair Corralation between Thermo Fisher and Lonza Group
Considering the 90-day investment horizon Thermo Fisher Scientific is expected to under-perform the Lonza Group. But the stock apears to be less risky and, when comparing its historical volatility, Thermo Fisher Scientific is 2.34 times less risky than Lonza Group. The stock trades about -0.04 of its potential returns per unit of risk. The Lonza Group is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 56,144 in Lonza Group on September 3, 2024 and sell it today you would earn a total of 4,531 from holding Lonza Group or generate 8.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thermo Fisher Scientific vs. Lonza Group
Performance |
| Timeline |
| Thermo Fisher Scientific |
| Lonza Group |
Thermo Fisher and Lonza Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thermo Fisher and Lonza Group
The main advantage of trading using opposite Thermo Fisher and Lonza Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thermo Fisher position performs unexpectedly, Lonza Group 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 Lonza Group will offset losses from the drop in Lonza Group's long position.| Thermo Fisher vs. Agilent Technologies | Thermo Fisher vs. IDEXX Laboratories | Thermo Fisher vs. Illumina | Thermo Fisher vs. Waters |
| Lonza Group vs. China New Energy | Lonza Group vs. Sonic Healthcare Ltd | Lonza Group vs. Charles River Laboratories | Lonza Group vs. Qiagen NV |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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